Performance measurement and improvement in the management of bank networks using data envelope analysis
Camanho, Ana Maria Cunha Ribeiro dos Santos Ponces (1999) Performance measurement and improvement in the management of bank networks using data envelope analysis. PhD thesis, University of Warwick.
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Official URL: http://webcat.warwick.ac.uk/record=b1366654~S1
This aim of this thesis is to develop a comprehensive methodology for assessing performance
and setting targets in multi-unit organisations in the financial sector. These are structured as
networks- of decision making units (DMUs) that seek to operate efficiently, satisfy customer
requirements effectively, and generate profit. The achievement of this objective relies on the use
of the Data Envelopment Analysis (DEA) method, which is the main subject area of this thesis.
It involved the development of new models and methods for performance measurement and
improvement at the DMUs.
To ensure the relevance of the methodology developed, a commercial bank is used as a case
study. The models and methods developed were motivated by the study of the bank branches
from this institution and illustrated with empirical data. This helps to guarantee that the
developments are driven from the needs of the organisations, which contributes to move the
DEA method into the 'real problem' zone. An effort is made to ensure that the models and
methods developed in this thesis are generic and applicable to other types of 'for-profit'
organisations outside the financial services sector.
The thesis is structured as follows. An overview of frontier analysis methods, with particular
emphasis on the DEA method is presented in Chapter 2. This chapter sets up the ground for the
enhancements to the DEA method presented throughout the thesis. Chapter 3 reviews the
literature on banking performance assessment. It summarises the main aims, methodologies and
conclusions of previous research, with emphasis on the studies based on the DEA method. The
information gathered is used to guide the choice of the themes and questions addressed in the
context of the analysis of financial institutions' performance. Chapter 4 introduces the
commercial bank analysed and the financial sector where it operates. The description of the bank
concerns the methods currently used to assess branches' performance.
Chapter 5 develops a framework for performance appraisal, integrating efficiency and
profitability dimensions. In the context of financial institutions' assessment, it is proposed the
assessment of efficiency from two different perspectives, corresponding to the operational
activity and the outcomes of financial intermediation. In order to provide a comprehensive
efficiency assessment, a new DEA model is used, which can identify inefficiencies in both input
and output levels, considering an objective of cost minimisation. The resulting efficiency
measure is decomposed in order to provide a comprehensive picture of the inefficiency sources
and its managerial implications.
The following chapters explore different aspects of operational efficiency in greater detail,
providing both enhanced models of efficiency measurement and target setting. Chapter 6 focuses
on the analysis of the effect of scale size on efficiency. Performance improvement issues relating
to the choice of appropriate benchmarks and practical aspects relating to the implementation of
the DEA results are addressed. Chapter 7 focuses on the analysis of cost efficiency considering
different price scenarios, including price uncertainty at the DMU level and situations where both
input and price adjustments are possible.
Chapter 8 explores the differences in performance of groups of bank branches in different
locations, associated with distinct environmental conditions. A new performance index is
developed, which can disentangle within-group managerial inefficiencies from those attributable
to the context within which the DMUs are required to operate.
Overall, this thesis contributes to illustrate the relative strengths of DEA with respect to a
multitude of purposes of performance evaluation and improvement. It also provides a
comprehensive assessment of a financial institution, which shows that the DEA method can be
successfully used as a decision support tool for many issues faced by these organisations.
|Item Type:||Thesis or Dissertation (PhD)|
|Subjects:||H Social Sciences > HG Finance|
|Library of Congress Subject Headings (LCSH):||Data envelopment analysis, Financial institutions, Banks and banking -- Case studies|
|Official Date:||September 1999|
|Institution:||University of Warwick|
|Theses Department:||Warwick Business School|
|Supervisor(s)/Advisor:||Dyson, Robert G.|
|Sponsors:||Portugal. Ministério da Ciência e da Tecnologia|
|Extent:||xvii, 319 leaves|
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