In this study, we focus on how banks can enhance their efficiency in the utilization of resources to ensure their economic sustainability. We propose a novel three-stage (production, investment, and revenue generation) network Data Envelopment Analysis (DEA) with bootstrapping to evaluate the performance of the six big Canadian banks for the period 2000-2017, amid the 2007 financial crisis and the increasing competition level due to new technologies. We identify the best practices in each stage that can be used as benchmarks by other banks to improve their economic sustainability. Our results indicate that the 2007 financial crisis resulted in lower efficiencies in the performance of Canadian banks. This decline was not substantial for the production and investment stages when the revenue generation stage received the greatest hit. In addition, we observed that the individual banks did not have consistent performance in the different stages. Finally, we compared our model with the black box DEA model and concluded that the network DEA provides more insightful and accurate results in terms of banks' efficiencies.
We study joint investment by a buyer and a supplier in improving the supplier's capacity using a Stackelberg game model. We analyze both buyer‐led and supplier‐led situations. We show that in both cases the players have an opportunistic behavior toward investment. In the buyer‐led game, when the buyer finds the supplier motivated enough to invest, he avoids any direct contribution on capacity improvement. In this situation, the buyer follows an order inflation strategy to increase the investment of the supplier. However, when the supplier does not show the desire to make enough investment, the buyer will engage in direct investment in the supplier's capacity. We showed that although the order inflation strategy increases the buyer's optimal order quantity, it does not coordinate the supply chain. Also, in the case that the buyer is forced to share the investment costs with the supplier, he relies less on order inflation strategy. In the supplier‐led game, we demonstrated that the buyer has no motivation to use order inflation strategy. In the case that the supplier is the only investor, the buyer‐led game results in a higher profit for the buyer, supplier, and the supply chain. Finally, we looked at two extensions where the supplier is penalized for unsatisfied demand and the buyer uses an order‐postponement strategy.
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