Best practice analysis of bank branches: An application of data envelopment analysis in a large Canadian bank

Best practice analysis of bank branches: An application of data envelopment analysis in a large Canadian bank

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Article ID: iaor19991263
Country: Netherlands
Volume: 98
Issue: 2
Start Page Number: 269
End Page Number: 289
Publication Date: Apr 1997
Journal: European Journal of Operational Research
Authors: , ,
Keywords: financial, performance, statistics: data envelopment analysis
Abstract:

This paper presents a best practice analysis of the Ontario based branches of a large Canadian bank. Consistent with managerial goals, the analysis focuses on the performance of branch personnel; it considers as outputs both transactions and maintenance work. To sharpen our efficiency estimates, we use DEA AR models with output multiplier constraints based on standard transaction and maintenance times. A model that adds similar constraints on the input multipliers, based on personnel salary, is used to find the cost efficient branches, and estimate ‘allocative’ efficiency. Special emphasis is placed on quantifying and discussing the impact of model choice on the results. Post-hoc statistical tests are performed to investigate the impact of several external factors on personnel efficiency as well as the effects of efficiency on quality and profitability.

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