DEA/AR efficiency and profitability of Mexican banks a total income model

Data envelopment analysis (DEA) and linked-cone assurance region (LC-AR) models are used in this paper to investigate the efficiency and profitability potential of Mexican banks as they engage in activities that incur interest and non-interest expenses and produce income. DEA provides a measure of e...

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Published in:European journal of operational research 1997-04, Vol.98 (2), p.346-363
Main Authors: Taylor, William M., Thompson, Russell G., Thrall, Robert M., Dharmapala, P.S.
Format: Article
Language:English
Subjects:
Assurance regions
Bank management
Banking industry
Benchmarks
Data envelopment analysis
Economic models
Efficiency
Efficiency/profitability potential
Operations research
Profitability
Quality-benchmarking
Studies
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cited_by cdi_FETCH-LOGICAL-c519t-9c65f270815f45b0d6c8641a6b41d1b7093264c27b45281da5c8ae230714b3073
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container_title European journal of operational research
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creator Taylor, William M.
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Dharmapala, P.S.
description Data envelopment analysis (DEA) and linked-cone assurance region (LC-AR) models are used in this paper to investigate the efficiency and profitability potential of Mexican banks as they engage in activities that incur interest and non-interest expenses and produce income. DEA provides a measure of each bank's relation to the best-practice frontier for its competitors. This can provide a better quality-benchmark than using industry averages or a particular peer bank as the benchmark. The banks are classified into efficient and inefficient sets. Multiplier values for AR-inefficient banks with unique slacks indicate the potential for management to improve the bank's performance relative to its peers. LC-ARs that provide economically reasonable bounds for the multipliers lead to profitability potential, as distinct from efficiency, results.
doi_str_mv 10.1016/S0377-2217(96)00352-9
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ispartof European journal of operational research, 1997-04, Vol.98 (2), p.346-363
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1872-6860
language eng
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source ScienceDirect Freedom Collection
subjects Assurance regions
Bank management
Banking industry
Benchmarks
Data envelopment analysis
Economic models
Efficiency
Efficiency/profitability potential
Operations research
Profitability
Quality-benchmarking
Studies
title DEA/AR efficiency and profitability of Mexican banks a total income model
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