An Account of Dea‐based Contributions in the Banking Sector

Ouenniche, Jamal; Carrales, Skarleth; Tone, Kaoru; Fukuyama, Hirofumi

doi:10.1002/9781118946688.ch14

Cited by 2 publications

(1 citation statement)

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“…For a discussion on the choice of inputs and outputs in banking applications, we refer the reader to Fethi and Pasiouras (2010). Our survey and classification of the inputs and outputs used in the literature (see Ouenniche et al 2017) along with an analysis of the balance sheet and the income statement of UK commercial banks revealed that inputs are typically chosen based on resources, costs, or financial burden, whereas outputs are typically chosen based on bank's ability to provide financial services (i.e., Loans and Deposits), generate revenue (i.e., Income and Investments) and acquire more assets (i.e., Investments). However, our critical analysis of such choices suggests that some authors' choices-especially of inputs based on financial burden rather penalise the very means by which banks are able to perform their lending operations.…”

Section: Empirical Studymentioning

confidence: 99%

Assessing efficiency profiles of UK commercial banks: a DEA analysis with regression-based feedback

Ouenniche

Carrales

2018

Ann Oper Res

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Data envelopment analysis (DEA) has witnessed increasing popularity in banking studies since 1985. In this paper, we propose a new DEA-based analysis framework with a regression-based feedback mechanism, where regression analysis provides DEA with feedback that informs about the relevance of the inputs and the outputs chosen by the analyst. Unlike previous studies, the DEA models used within the proposed framework could use both inputs and outputs, only inputs, or only outputs. So far, the UK banking sector remains relatively under researched despite its crucial importance to the UK economy. We use the proposed framework to address several research questions related to both the efficiency of the UK commercial banking sector and DEA analyses with and without regression-based feedback. Empirical results suggest that, on average, the commercial banks operating in the UK-whether domestic or foreign-are yet to achieve acceptable levels of overall technical efficiency, pure technical efficiency, and scale efficiency. On the other hand, DEA analyses with and without a linear regression-based feedback mechanism seem to provide consistent findings; however, in general DEA analyses without feedback tend to over-or under-estimate efficiency scores depending on the orientation of the analyses. Furthermore, in general, a linear regression-based feedback mechanism proves effective at improving discrimination in DEA analyses unless the initial choice of inputs and outputs is well informed.Keywords Data envelopment analysis · Efficiency · UK commercial banks · DEA models without explicit inputs · DEA models without explicit outputs

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Section: Empirical Studymentioning

confidence: 99%