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The role of bank affiliation in bank efficiency: a fuzzy multi-objective data envelopment analysis approach

Author

Listed:
  • Sabri Boubaker

    (EM Normandie Business School, Métis Lab
    International School, Vietnam National University)

  • Duc Trung Do

    (School of Management, Swansea University)

  • Helmi Hammami

    (Rennes School of Business)

  • Kim Cuong Ly

    (Nottingham University Business School, University of Nottingham)

Abstract

This paper examines differences in bank efficiency between banks affiliated with single-bank holding companies and those affiliated with multi-bank holding companies by applying a fuzzy multi-objective two-stage data envelopment analysis technique. Using a sample of U.S. commercial banks covering 1994–2018, the results show that banks affiliated with multi-bank holding companies are more efficient than those affiliated with single-bank holding companies, suggesting that the former takes advantage of their parents’ resources to enhance their efficiency, consistent with the internal capital market theory. They also show that banks with a powerful CEO exhibit lower efficiency than others. Moreover, there is an inverted U shape relationship between multi-bank holding company structure and bank efficiency, suggesting the presence of an optimal number of multi-bank holding subsidiaries that maximizes efficiency.

Suggested Citation

  • Sabri Boubaker & Duc Trung Do & Helmi Hammami & Kim Cuong Ly, 2022. "The role of bank affiliation in bank efficiency: a fuzzy multi-objective data envelopment analysis approach," Annals of Operations Research, Springer, vol. 311(2), pages 611-639, April.
    • Handle: RePEc:spr:annopr:v:311:y:2022:i:2:d:10.1007_s10479-020-03817-z
    DOI: 10.1007/s10479-020-03817-z
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    More about this item

    Keywords

    Bank holding companies; Bank efficiency; CEO power; Multi-objective programming; Data envelopment analysis;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models

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