Modeling the operating efficiency of banks: a nonparametric methodology

This paper seeks to model and evaluate the comparative operating efficiency of banks using a non-parametric methodology known as the data envelopment analysis (DEA). The paper adopts a modified version of DEA in which no inputs are specified. The only variables considered are the financial ratios. T...

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Bibliographic Details
Published in:Logistics information management 1998-02, Vol.11 (1), p.5-17
Main Authors: Al-Shammari, Minwir, Salimi, Anwar
Format: Article
Language:English
Subjects:
Banking
Computer modelling
Data envelopment analysis
Jordan
Operating performance
Process efficiency
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Summary:This paper seeks to model and evaluate the comparative operating efficiency of banks using a non-parametric methodology known as the data envelopment analysis (DEA). The paper adopts a modified version of DEA in which no inputs are specified. The only variables considered are the financial ratios. The results obtained suggest that the majority of banks investigated are fairly inefficient over the period 1991-94. In addition to calculating efficiency scores for all banks in the sample, the study results revealed the composite reference set and their shadow prices, major determinants of banks' relative performance, and the target financial ratios.
ISSN:0957-6053
1758-7948
DOI:10.1108/09576059810202196