Article ID: | iaor20071890 |
Country: | Singapore |
Volume: | 23 |
Issue: | 2 |
Start Page Number: | 229 |
End Page Number: | 246 |
Publication Date: | Jun 2006 |
Journal: | Asia-Pacific Journal of Operational Research |
Authors: | Lu Wen-Min, Lo Shih-Fang |
Keywords: | statistics: data envelopment analysis |
The aim of this paper is to explore the efficiency and the benchmarks of financial holding companies (FHCs) for a small open economy, Taiwan. We employ a two-stage production process including profitability and marketability performance using a non-parametric frontier method – data envelopment analysis (DEA). Furthermore, the factor-specific measure and BCC (Banker–Charnes–Cooper) model are combined together not only to identify the inputs/outputs that are most important but also to distinguish those FHCs which can be treated as benchmarks. Our empirical result shows that (1) big-sized FHCs are generally more efficient than small-sized ones; (2) FHCs with the main body of insurance averagely perform better than the other two types (banks and securities); (3) while small efficient FHCs are easily to become benchmarks, big efficient FHCs are deemed as competitive niche players; (4) further mergers and acquisitions among FHCs should be considered so as to achieve economies of scale. The profitability/marketability matrix of FHCs is also presented.