Title: Modelling a shared-resource network DEA with bad output in measuring technical efficiency of banking system

Authors: Khac Thanh Mai; Manh-Trung Phung; Bao-Ngoc Tong; Cheng-Ping Cheng; Son-Tung Le

Addresses: Faculty of Financial Management, Vietnam Maritime University, 484 Lach Tray Str., Hai Phong City, Vietnam ' Faculty of Financial Management, Vietnam Maritime University, 484 Lach Tray Str., Hai Phong City, Vietnam ' Department of Finance, National Yunlin University of Science and Technology, 123 University Rd., Section 3, Douliou, Yunlin 64002, Taiwan ' Department of Finance, National Yunlin University of Science and Technology, 123 University Rd., Section 3, Douliou, Yunlin 64002, Taiwan ' Faculty of Maritime Business, Vietnam Maritime University, 484 Lach Tray Str., Hai Phong City, Vietnam

Abstract: This paper develops a serial three-stage network data envelopment analysis (DEA) model to estimate the efficiency of banks who transform their resources into final products, incomes. Different from previous studies, which oversimplified the banking's production, we divide it into three stages, namely, capital organisation, capital allocation, and capital turnover. The shared resources and undesirable outputs are also integrated into the evaluation framework to better reflect the nature of banking business. The novel contribution of our network structure is its ability to disclose the inefficient of each stage as well as its relative importance in the whole operation. The model is then employed to appraise the technical efficiency of 35 banks in Taiwan. Some managerial implications are offered to optimise their performance.

Keywords: data envelopment analysis; DEA; network structure; shared resources; undesirable outputs.

DOI: 10.1504/IJMOR.2021.120010

International Journal of Mathematics in Operational Research, 2021 Vol.20 No.3, pp.432 - 452

Received: 21 Sep 2020
Accepted: 14 Feb 2021
Published online: 04 Jan 2022 *

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