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Measuring congestion with undesirable outputs in China’s banking industry

Author

Listed:
  • Xian-tong Ren

    (Chinese Academy of Sciences
    University of Chinese Academy of Sciences)

  • Chen Jiang

    (Chinese Academy of Sciences
    University of Chinese Academy of Sciences)

  • Yuan Cui

    (Nanjing University of Posts and Telecommunications)

  • Guo-liang Yang

    (Chinese Academy of Sciences
    University of Chinese Academy of Sciences)

  • Jean-Michel Sahut

    (IDRAC Business School
    Paris-Saclay University)

Abstract

Congestion with undesirable outputs is known as the phenomenon where by overinvestment in inputs leads to a decrease in desirable outputs and an increase in undesirable outputs. This paper proposes a new method for measuring congestion which considers undesirable outputs and the joint weak disposability between desirable outputs and undesirable outputs, a consideration which has been neglected in previous congestion studies, based on data envelopment analysis. The method proposed herein is then applied to the case of China’s banking industry, revealing that the main cause of congestion in China’s banking industry is overinvestment in fixed inputs and number of employees. This paper also analyzes the congestion in different types of banks to help for further analysis and decision-making.

Suggested Citation

  • Xian-tong Ren & Chen Jiang & Yuan Cui & Guo-liang Yang & Jean-Michel Sahut, 2025. "Measuring congestion with undesirable outputs in China’s banking industry," Review of Quantitative Finance and Accounting, Springer, vol. 65(1), pages 401-436, July.
    • Handle: RePEc:kap:rqfnac:v:65:y:2025:i:1:d:10.1007_s11156-024-01380-3
    DOI: 10.1007/s11156-024-01380-3
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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