Investigation of Bank Management Performance Using DEA Technique (Case Study of Different Branches of Tehran Banks)

Abstract

Banks are considered as vital circulatory system of finance and financial institutions that collect assets from various sources and allocate them to sectors that need market liquidity. Despite existing limitations, the present enquiry aimed to examine the efficiency of bank management through the use of Data Envelopment Analysis Model. Typical Models of Data Envelopment Analysis employed in evaluation of organizational performance are based on the black box events, that is, the input into units under scrutiny converted into output regardless of the intermediate stages. However, providing bank services is a complex process comprising different interconnected stages and the interwoven stages involved necessitated the use of Network Data Envelopment Analysis, in the present study, to design a Bank Performance Measurement Model. Thus, the aim of this scrutiny was to identify managerial weaknesses by calculating the management efficiency using the Network Model and to offer viable solutions. To serve the purpose, the banking data accumulated in 19 private bank branches in Tehran during the year 2014 were surveyed to estimate both the overall efficiency and the efficiency of each bank segment. The findings indicated significantly lower levels of efficiency in Network Collective Models compared to Simple Collective Models. Also, the NSBM model rendered a more precise measure of efficiency in comparison to the SBM model which can enable managers to identify and rectify inefficiencies in each sector.

Keywords

• bank management efficiency
• dea
• nsbm
• sbm