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An Explanation for the Paradox Phenomenon in Taiwan¡¯s Bank Performances

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  • Ming-Chung Chang

Abstract

A traditional DEA (data envelopment analysis) model is useful for estimating the best performances for a successful and a more efficiency DMU (decision-making unit). This study uses a traditional DEA model to estimate the efficiency score of bank z in Taiwan and get a good efficiency score based on the 2006 data, however the bank z was taken over by the government in early 2007. In illustrating this paradox phenomenon, the study reconsiders the tradition DEA model by contributing a worst-practice frontier under a traditional DEA model. Findings: the bank z is located on the intersection of the worst-practice frontier and the traditional DEA model frontier. This study provides a critical determinant of a bank¡¯s failure that a bank has a location such as the bank z.

Suggested Citation

  • Ming-Chung Chang, 2014. "An Explanation for the Paradox Phenomenon in Taiwan¡¯s Bank Performances," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 5(1), pages 21-28, January.
    • Handle: RePEc:jfr:ijfr11:v:5:y:2014:i:1:p:21-28
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    References listed on IDEAS

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