Title: Evaluating the efficiency of the commercial banks admired in Fortune 500 list; using data envelopment analysis
Authors: Mohammad Saljoughian; Hadi Shirouyehzad; Elaheh Khajeh; Reza Dabestani
Addresses: Department Management, University of Isfahan, Daneshgah St., Isfahan, Iran ' Department of Industrial Engineering, Najafabad Branch, Islamic Azad University, P.O. Box 517, Isfahan, Iran ' Department of Management, University of Isfahan, Hezar Jerib St., 81746-73441, Isfahan, Iran ' Department of Management and Economics, Tarbiat Modares University, Jalal Ale Ahmad Ave., P.O. Box 14115-337, Tehran, Iran
Abstract: The aim of this paper is to propose a new approach for identifying the relatively most efficient banks in future 500 list. The second purpose of this paper is to suggest benchmarks for the banks that were not considered efficient. In this paper, data envelopment analysis (DEA) was used to discriminate efficient banks from the inefficient ones. To do so, each bank was considered as a decision making unit (DMU). Then, experts assigned inputs and outputs to the model. They suggested assets as the input and revenue, profit, and total stockholders' equity as the output. Having discriminated the DMUs, we ranked them and ran a sensitivity analysis on the data. Necessary data were acquired from the Fortune 500 list. The results, findings, implications, and suggestions are presented in the paper. DEA results can serve as a benchmark for the inefficient DMUs. That is, each inefficient bank can find its benchmark and set proper policies to achieve the efficiency with least wastage of budget and time. The findings reveal that the banks with higher asset and profit are not necessarily the most efficient.
Keywords: data envelopment analysis; DEA; efficiency; commercial banks; ranking; sensitivity analysis.
International Journal of Productivity and Quality Management, 2019 Vol.26 No.1, pp.58 - 73
Received: 22 Mar 2017
Accepted: 29 Aug 2017
Published online: 10 Dec 2018 *