Top PDF An application of data envelopment analysis for measuring the relative efficiency in banking industry

An application of data envelopment analysis for measuring the relative efficiency in banking industry

An application of data envelopment analysis for measuring the relative efficiency in banking industry

Measuring the relative efficiency of banking industry has been a popular subject among both practitioners and academicians. Data envelopment analysis (DEA) has been widely applied for different purposes. This paper presents an empirical investigation to measure the relative efficiency of various banks located in province of Semnan, Iran. The proposed study uses DEA method to rank all units and using Anderson and Peterson method (1993) [ Andersen, P., & Petersen, N. C. (1993). A procedure for ranking efficient units in data envelopment analysis. Management Science, 39, 1261-1264 ], we provide some super efficiency for inefficient units. The study also provides reference numbers for inefficient units and gives some target values for all inefficient units.
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Measuring relative performance of banking industry using a DEA and TOPSIS

Measuring relative performance of banking industry using a DEA and TOPSIS

During the past few years, there have been tremendous efforts on using recent advances in technology to provide electronic services and helping people transfer funds electronically, which increases security and bring peace of mind among banks’ customers. One of the primary concerns in banking industry is to measure the relative efficiency of banking industry in terms of e-business. This could be done through considering different criteria and measures them in terms of various perspectives using multi criteria decision making (MCDM) approaches such as data envelopment analysis (DEA) (Charnes et al., 1978, 1994; Andersen et al., 1993), analytical hierarchy process (AHP) (Saaty, 1992), Entropy and Technique for Order Preference by Similarity to Ideal Solution (TOPSIS).
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Relative Efficiency of Health Provision: a DEA Approach with Non-discretionary Inputs

Relative Efficiency of Health Provision: a DEA Approach with Non-discretionary Inputs

In this paper we systematically compare the output from the health system of a set of OECD countries with resources employed (doctors, nurses, beds and diagnostic technology equipment). Using data envelopment analysis (DEA), we derive a theoretical production frontier for health. In the most favourable case, a country is operating on the frontier, and is considered as efficient. However, most countries are found to perform below the frontier and an estimate of the distance each country is from that borderline is provided – the so-called efficiency score. Moreover, estimating a semi-parametric model of the health production process using a two-stage approach, we show that inefficiency in the health sector is strongly related to variables that are, at least in the short- to medium run, beyond the control of governments. These are GDP per capita, the education level, and unhealthy lifestyles as obesity and smoking habits.
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Efficiency determinants in Portuguese banking industry: an application through fractional regression models

Efficiency determinants in Portuguese banking industry: an application through fractional regression models

regression, was subsequently used in numerous studies applied to several industries, including the banking sector. Given that the DEA efficiency scores assume continuous values in the interval  0; 1, the Tobit regression was considered by many authors to be more appropriate instead of simple linear models, which should be imposed a two-limit constraint. However, despite the extensive application of Tobit regression models to DEA efficiency scores, recent studies report this technique as a poor specification because there is a positive probability that the scores assume a value equal to 1, but the probability of the value equal to 0 is zero. Several authors report that although the Tobit model may be appropriate to describe data censored in the interval [0, 1], it is not appropriate to apply to the DEA efficiency scores, since these are obtained naturally, derived from its calculation method, and not by any kind of censorship (Papke and Wooldrigde, 1996) (Hoff, 2007) (McDonald, 2009) (Ramalho et al., 2010). Papke and Wooldridge (1996) started the study of appropriate regressions to this type of data, and promoted the creation of a new group of regressions, which have been frequently called by researchers by fractional regression models, whose dependent variables assume values in the interval [0; 1]. Ramalho et al. (2009; 2010; 2011) test several alternative regression models to deal with the fractional nature of DEA scores, namely: Logit, Probit, Loglog and Cloglog regressions. This research intends to contribute to the study of this topic, since (i) we do not know empirical studies applied to the banking sector in Portugal, in which efficiency scores are estimated through a two-stage DEA model similar to the one applied; (ii) nor do we know the existence of empirical studies in which the efficiency determinants of the banking sector in Portugal are identified through fractional regressions. The main objective of this study is to evaluate the efficiency and identify the efficiency determinants of the main banks operating in Portugal, which are estimated in an integrated and more demanding way, which surpasses the traditional standard efficiency models. The efficiency scores were estimated based on a two-stage model and, at a later stage, the main determinants of bank efficiency were identified based on the application of fractional regressions. These alternative models are effectively more appropriate to deal with the fractional nature of DEA scores.
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DATA ENVELOPMENT ANALYSIS OF BANKING SECTOR IN BANGLADESH

DATA ENVELOPMENT ANALYSIS OF BANKING SECTOR IN BANGLADESH

Financial institutions around the world expe rienced substantial changes in the last few years. Technological progress, reduced information costs, fiercer competition among both bank and non bank financial intermediaries and ongoing deregulation all led to substantial changes in nu merous financial systems. Bank efficiency has been an important issue in this transition. There are two types of methods to measure comparative efficiency: parametric and non parametric me thods. The non parametric approaches use ma thematical programming techniques (Coelli, 1996); among those Data Envelopment Analysis (DEA) is widely used. The primary focus of DEA is to measure the production or performance function of DMUs (decision making unit).
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Factors affecting the technical efficiency of production of the Brazilian banking system : a comparison of four statistical models in the context of data envelopment analysis

Factors affecting the technical efficiency of production of the Brazilian banking system : a comparison of four statistical models in the context of data envelopment analysis

In this paper we follow the intermediation approach. Under this approach banks function as financial intermediaries converting and transferring financial assets be- tween surplus units and deficit units. In this context we take as output the vector y = (securities, loans, demand deposits). This output vector is combined into a single measure, also denoted by y, representing the sum of the values of investment securities , total loans and demand deposits. Here we follow along the lines of Sathie (2001) who, in a similar study of the Australian banking industry, considers demand deposits as output. All output variables, as shown below, are measured on a per employee basis since they are normalized by the number of employees. This approach has the advantage of making the banks more comparable through the reduction of variability and of the influence of size in the DEA analysis.
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Evaluating the european bank efficiency using data envelopment analysis : evidence in the aftermath of the recent financial crisis

Evaluating the european bank efficiency using data envelopment analysis : evidence in the aftermath of the recent financial crisis

Drake (2001) analyses relative efficiencies within the banking sector and the productivity change in the main UK banks over the period 1984 to 1995. The results obtained provide important insights into the size-efficiency relationship in the considered sample of banks and offer a perspective on the evolving structure and competitive environment within which the banks are currently operating. Webb (2003) utilizes DEA window analysis, to measure the relative efficiency levels of large UK retail banks during the period 1982-1995, mostly finding that the overall long run average efficiency trend is falling, and also that all banks in the study show reducing levels of efficiency over the entire time period.
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Method Data Envelopment Analysis for Estimating of Efficiency in Indication of Poverty

Method Data Envelopment Analysis for Estimating of Efficiency in Indication of Poverty

DEA method can be very useful in the Decision Support Systems, when it is required to classify some objects based on the assessment of their effectiveness . In assessing of comp le x systems concomitant problem of determining of the relative importance of the diverse indicators for the functioning of the system often occurs. Also, there are difficu lties in obtaining single – integral – efficiency indicators. In light of the investigated problem DEA method allows to avoid these comple xit ies and makes it possible to obtain an integrated indicator of the effectiveness for each of the levels of poverty of the population included in the considered system, without requiring a priori assignment of we ight coefficients for the variab les.
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An empirical study for measuring the success index of banking industry

An empirical study for measuring the success index of banking industry

Measuring organization performance plays an important role for developing better strategic plans. In today's competitive environment, organizations attempt for the product quality or offering the service, delivery, reliability capability and the customer satisfaction. These properties are not measurable only by traditional financial criteria and we need a method, which could consider non-financial factors as well. The present study of this paper proposed a hybrid of balanced score card (BSC) and data envelopment analysis (DEA) method for an empirical study of banking sector. The study proposes a model for assessing the Tose`eTa`avon bank performance, which is an example of governmental credit and financial services institutes. The study determines different important factors associated with each four components of BSC and uses analytical hierarchy process to rank the measures. In each part of BSC implementation, we use DEA for ranking different units of bank and efficient and inefficient units are determined.
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Efficiency Decomposition with Enhancing Russell Measure in Data Envelopment Analysis

Efficiency Decomposition with Enhancing Russell Measure in Data Envelopment Analysis

Abstract: Problem statement: Most studies about the application of Data Envelopment Analysis (DEA) follow the concept of radial and non-radial efficiency measures. Because of some difficulties with the measure of weights, Russell measure utilizes the mean of all input/output efficiency measurements as the efficiency score of a specific business unit. However, this may render bias. Approach: This study provided a reasonable mechanism in the determination of user-specified weights for inputs to enhance the Russell measure which avoids the computational and interpretative difficulties. Results: Additionally, it can assist the decision maker in determining the relative importance of factors to improve the discrimination level of business unit efficiencies. Conclusion: The major advantages of the proposed technique are that it can not only provide a reasonable mechanism in the determination of user specified weights but also enhance the Russell measure. In addition, it can assist the decision maker in determining the relative importance of factors to improve the discrimination level of DMUs efficiencies and ensure the optimal scores of DMUs as the CCR efficiency.
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Benchmarking in the Academic Departments using Data Envelopment Analysis

Benchmarking in the Academic Departments using Data Envelopment Analysis

Abstract: Problem statement: The purpose of this study is to analyze efficiency and benchmarking using Data Envelopment Analysis (DEA) in departments of University. Benchmarking is a process of defining valid measures of performance comparison among peer decision making units (DMUs), using them to determine the relative positions of the peer DMUs and, ultimately, establishing a standard of excellence. Approach: DEA can be regarded as a benchmarking tool, because the frontier identified can be regarded as an empirical standard of excellence. Once the frontier is established, then one may compare a set of DMUs to the frontier. Results: We apply benchmarking to detect mistakes of inefficient departments to become efficient and to learn better managerial practice. Conclusion: The results indicated 9 departments are inefficient between 21 departments. The average inefficiency is 0.8516. Inefficient departments don’t have excess in the number of teaching staff, but all of them have excess the number of registered student. The shortage of performed research works is the most important indicators of outputs in inefficient departments, which must be corrected.
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The Efficiency Measurement of Parallel Production Systems: A Non-radial Data Envelopment Analysis Model

The Efficiency Measurement of Parallel Production Systems: A Non-radial Data Envelopment Analysis Model

This study presents an alternative method for estimating the efficiency of a parallel production system and the efficiency of its units. Since DEA models implicitly use Production Possibility Set (PPS) to evaluate the efficiency of DMUs, we first define the PPS of the parallel production systems. Then, based on this PPS, we introduce a non-radial DEA model in Slacks-Based Measure (SBM) formulation for aggregating the units in a parallel production system. Under this framework, the overall efficiency of the system is expressed as a weighted sum of the efficiencies of its units. With decomposition of the overall efficiency, the units which cause the inefficient operation of the system can be identified for future improvements An example from the forest production industry in Taiwan is applied to compare the new approach with Kao’s parallel model.
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Efficiency in the Romanian Banking System: An Application of Data Envelopment Analysis

Efficiency in the Romanian Banking System: An Application of Data Envelopment Analysis

commercial banks’ performance. For instance, Casu and Molyneux (2000) employed the DEA approach to investigate the efficiency in European banking systems. They attempted to examine whether the productive efficiency of European banking systems has improved and converged towards a common European frontier, following the process of EU legislative harmonization. Noulas (2001) studied the effect of banking deregulation on private and public-owned banks by using Data Envelopment Analysis. The results showed that the private banks were more efficient than the public-owned, although the gap between levels of efficiency is not relevant from a statistical viewpoint. Barr et al. (2002) evaluated the productive efficiency of U.S. commercial banks. Study results revealed a close interdependence between efficiency and independent measures of performance, including confidential ratings made by bank examiners. Jemric (2002) investigated the efficiency of banks in Croatia. The main results showed that foreign banks are, on average, the most efficient; also banks that recently entered the market are more efficient than those operating for a long time. Also, small banks are more efficient than large ones. Wu (2005) examined productivity and efficiency of banks in Australia during 1983-2001. The main results reported that efficiency increased in times of deregulation. Loukoianova (2008) made a comparison of the banking sectors in Western Europe, the U.S. and Japan depending on the specialization of banks.
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A robust AHP-DEA method for measuring the relative efficiency: An application of airport industry

A robust AHP-DEA method for measuring the relative efficiency: An application of airport industry

Sadjadi and Omrani (2008) are also the first ones who introduced the idea of robust DEA for handling uncertainty in the data. They examined both robust methods introduced by Ben-Tal and Nemirovski (1999) and Bertsimas and Sim (2003) to handle uncertainty for two applications from energy and telecommunication industries and compared their results with the nominal solutions. They concluded that the price of robustness does not have significant impact of the quality of final results but it immunes the final solutions against data uncertainty, significantly.
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The Concept of Early Vascular Ageing – An Update in 2015

The Concept of Early Vascular Ageing – An Update in 2015

arterial stifness (and EVA) is strongly inluenced by the BP load (MAP), HR, and SNS activity, there may exist some other important components (collagen protein synthesis and structure) and vascular risk factors (hyperglycaemia, dyslipidaemia, inlammation) independent of BP regulation. If shown to be true, for example after analysis based on Mendelian randomisation methodology, this opens up new possibilities to target these mechanisms of protein/collagen synthesis with new drugs to reduce arterial stifness. Such studies have been considered and drafted, but the results will not be ready for presentation in the near future. One speculative example involves the truncated and aberrantly farnesylated lamin A protein called progerin, which is found in children with the extremely rare and fatal premature ageing syndrome Hutchinson–Gilford progeria syndrome (HGPS). Recently, 25 patients with HGPS received the farnesyltransferase inhibitor lonafarnib for a minimum of 2 years. 27 The primary outcome for
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Culture dimensions and application of IFRSs in the banking industry

Culture dimensions and application of IFRSs in the banking industry

this amount must be based upon the requirements of central Banks of each country, setting the minimum provisions to be held against lending assets. At the same time, some countries apply the Basel accords (I, II and III) to identify and fulfill some capital adequacy ratios, market liquidity tests and stress tests. Thus, banks that are listed in European stock exchanges have been mandated to compile their consolidated financial statements according to IFRSs (since 2005) and to compile with Basel II for capital requirements (since 2007). Under these considerations, two kinds of provisions can be addressed: i) the specific provision, that is directly a correction of a single loan; ii) the general provision, that includes group impairments recognized whenever observable data display a measurable decline in estimated future cash flows that cannot yet be allocated to a single loan.
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	Field Cancerisation of the Upper Aerodigestive Tract: Screening for Second Primary Cancers of the Oesophagus in Cancer Survivors

Field Cancerisation of the Upper Aerodigestive Tract: Screening for Second Primary Cancers of the Oesophagus in Cancer Survivors

multiple synchronous and/or metachronous cancers of the oesophagus, lungs, and head and neck region (i.e. oral cavity, oropharynx, hypopharynx, or larynx). 90% of the tumours in head and neck are squamous cell carcinomas, and at least 75% of them are attributable to the combination of tobacco and alcohol consumption. The odds ratio of OSCC may be as high as 50.1 for those who are both heavy smokers and heavy drinkers in comparison to people who neither drink nor smoke. 13 It has been estimated

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Prod.  vol.27

Prod. vol.27

When performing a specific analysis of each DMU, it is possible to infer that, for terminal 3 to reach pure technical efficiency, it is only necessary that its reception capacity be reduced from 1,000 to 417.8 tons/hour, provided that the other variables be kept constant. On the other hand, DMU5 must also perform a cut of 12 employees involved in intermodal transshipment services and, at the same time, perform a small reduction in its storage capacity. With regard to terminal 6, it is important for managers to review what may be causing an excess of professionals, aligned with transshipment activities, so that this DMU can contribute to reach the efficiency frontier, since there must be a reduction of half of these employees, according to DEA. A similar situation can be observed in relation to DMU8, of public character, in which DEA also suggests a reduction from 85 to 42 employees. Again, it is important to emphasize the existence of worker flexibility in diverse functions, which may serve as an explanation for this fact.
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Technical efficiency analysis of marine shrimp farming (Litopenaeus vannamei) in biofloc and conventional systems: A case study in northeastern Brazil

Technical efficiency analysis of marine shrimp farming (Litopenaeus vannamei) in biofloc and conventional systems: A case study in northeastern Brazil

Even though it is an important issue, there is little information in the shrimp farming industry to assist producers in managing their projects, using available resources in the best possible way, reducing costs and increasing competitiveness gains, thus mitigating negative impacts. We have previously evaluated the financial indicators and the risk of BFT and conventional systems (Rego et al. 2017a, b), but in this study we focused on the technical efficiency of the production cycle of Litopenaeus vannamei in conventional and BFT systemsin northeastern Brazil.
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Efficiency analysis of scientific laboratories

Efficiency analysis of scientific laboratories

The purpose of the 6-month (and ongoing) strategic plan carried out by the university on this project is to observe how different areas of knowledge can cooperate by sharing their intellectual assets (e.g. facilities or partnerships) in and outside the university campus. Such situation can be considered a “barter project”, a system of exchange used to increase the number of outputs. As a beginner level “barter project”, it is not possible to measure the monetary efficiency gain stemming from the scientific laboratories; however, considering the lack of financial resources provided by the university, the scientific laboratories are still carrying out their research while supporting one another (learning how to articulate themselves in order to work with inputs producing better outputs) and implementing actions for their own independent living, e. g. participation in scientific meetings. This paper shows how efficiency can be increased within intellectual production, focusing mainly on articles, theses and books; not monetary gains in the short term.
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