Performance Evaluation in Bank Branch with Two-Stage DEA Model

Subject Areas : Business Strategy

Hilda Saleh ¹ , M. Rostamy Malkhalifeh ²

1 - Department of Mathematics Science and Research Branch, Islamic Azad University Tehran, Iran
2 - Department of Mathematics Science and Research Branch, Islamic Azad University Tehran, Iran

Received: 2014-01-20 Accepted : 2014-03-20 Published : 2015-01-01

Keywords: Efficiency, Data envelopment analysis, Two-stage, network model, bank performance,

Abstract :

Data Envelopment Analysis (DEA) has been applied inmany studies in the banking sector. Conventional DEA models considerthe system as a single-process black box. There are however a number ofso-called network DEA approach that consider the system as composedby distinct processes or stages, each one with its own inputs and outputsand with intermediate flows among the stages. In this paper some ofthese approaches that have been applied to banking sector are reviewedand in particular applications of two-stage DEA to Iranian bankingbranches are presented and discussed. The conclusions of this researchare that two-stage DEA models have a greater discrimination powerthan conventional, single-process DEA and since they allow a more finegrainedanalysis their results are generally more valid and useful. Themain drawback is the need for more detailed data (i.e. at the processlevel) and the greater complexity of the resulting models, especially ifthere are inputs or outputs that are shared among the processes.