African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4194

Full Length Research Paper

Evaluating branch efficiency of a Taiwanese bank using data envelopment analysis with an undesirable factor

Ke-Chiun Chang1, Chang-Liang Lin1, Yu Cao2* and Chia-Fu Lu3
  1Department of Business Administration, National Yunlin University of Science and Technology, Yunlin, Taiwan. 2Business School, Central South University, 932 Southern Lushan Road, 410083 Changsha, P. R. China. 3Business School, Nankai University, Tianjin, China.
Email: [email protected]

  •  Accepted: 22 February 2011
  •  Published: 18 April 2011

Abstract

 

This study applies a novel evaluation model to identify resource utility rate in the banking sector for enhancing branch operations. The Data Envelopment Analysis (DEA) model including undesirable-factor developed by Seiford and Zhu (2002) is used to determine the operational efficiency of each studied bank branch. This study identifies non-performing loan ratio as an undesirable output. Results indicate that the efficiency score differs between traditional DEA and the undesirable-factor DEA model considered here. Insufficient branches generally exhibit wasted personnel expenses and low profits. The study results can offer feasible strategies for adoption by bank branch managers to enhance performance.

 

Key words: Undesirable-factor, data envelopment analysis, performance evaluation.

Abbreviation

JEL: G21.

Copyright © 2024 Author(s) retain the copyright of this article.

This article is published under the terms of the Creative Commons Attribution License 4.0

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