Title: Measuring the productivity of the bank branches using data envelopment analysis and Malmquist index

Authors: Kaveh Khalili-Damghani; Batool Rahamni; Melfi Alrasheedi

Addresses: Department of Industrial Engineering, South Tehran Branch, Islamic Azad University, Tehran, Iran ' Department of Industrial Engineering, Industrial Management Institute, Tehran, Iran ' Department of Quantitative Methods, King Faisal University, Al Hufūf, Saudi Arabia

Abstract: Productivity measurement is assumed as one of the main guidelines to assess the effectiveness and efficiency of organisations. Productivity of the bank branches as main players of financial systems should be measured periodically. In this paper, the productivity and its components (i.e., technical efficiency change and technological frontier change) in 42 profit-making branches of a private bank in Tehran province, Iran, are analysed during the period 2014-2016. Inefficient bank branches are determined. The projection of inefficient bank branches toward efficient frontier is also discussed. Productivity and technical efficiency of production elements of branches of a private bank are investigated by Malmquist productivity index (MPI) and an input-oriented data envelopment analysis (DEA) in constant returns to scale (CRS) and variable returns to scale (VRS) conditions. Based on results, scale inefficiency had the greatest impact on technical efficiency in the case study.

Keywords: bank performance; Malmquist productivity index; MPI; data envelopment analysis; DEA; technical efficiency; technological frontier.

DOI: 10.1504/IJADS.2019.098663

International Journal of Applied Decision Sciences, 2019 Vol.12 No.2, pp.158 - 178

Received: 03 Oct 2017
Accepted: 18 Mar 2018
Published online: 29 Mar 2019 *

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