A measurement of Taiwan's bank efficiency and productivity change during the Asian financial crisis
by Tser-yieth Chen
International Journal of Services Technology and Management (IJSTM), Vol. 6, No. 6, 2005

Abstract: In this paper, we employ both deterministic and chance-constrained data envelopment analysis (DEA) approaches to measure the technical efficiency in Taiwan's banks during the period of the Asian financial crisis. Estimated results show that the 1994–1996's deterministic DEA efficiency scores, which identify 92.4% technical efficiency, are slightly higher than that of the 1998–2000 scores (0.909). The deterministic DEA model further gives the results of productivity change by showing a Malmquist total factor productivity (TFP) index of 1.226, and a technical change index of 1.232, which is higher than the technical efficiency change index, 0.995. It implies that there are certain productivity enhancements during the financial crisis period, the majority of which are from pure technical change, rather than changes in efficiency. The chance-constrained DEA efficiency scores are slightly higher as well as the period of technological change, but not significantly higher than that of deterministic DEA scores. Finally, a regression model is also used to highlight the rationales for or the causes of bank efficiency.

Online publication date: Sun, 31-Jul-2005

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