Performance measurement of Taiwan's commercial banks

Abstract

Most previous studies concerning company performance evaluation focus merely on operational efficiency. Operational effectiveness, however, which might directly influence the survival of a company, is usually ignored. As a result, this paper presents a study which uses an innovative two-stage data envelopment analysis model that separates efficiency and effectiveness to evaluate the performance of 41 listed corporations of the banking industry in Taiwan. The empirical result of this paper is that a company with better efficiency does not always mean that it has better effectiveness. There is no apparent correlation between these two indicators.

Financial Ratios versus Data Envelopment Analysis: The Efficiency Assessment of Banking Sector in Bahrain Bourse

“…On the other hand, a number of studies (Zhu,2000; Ho and Zhu 2004; Yu et al 2014) argue that the usefulness of FRA to estimate and predict firm efficiency has failed because of the univariate nature of ratio analysis, which presents major limitations in assessing firm performance. One ratio cannot capture the complete picture of performance of such an organization over the breadth of its activities, and there is no criterion for selecting a ratio that is appropriate for all interested parties therefore, a lack of an objective standard for selecting the ratios would cause instability and could not satisfy the needs of all users (Ho and Zhu 2004). Findings show that, financial ratios can only be an appropriate method when firms manage a single input to generate a single output.…”

A comparison of performance of Islamic and conventional banks 2004–2009

“…The pros and cons of FRA as a method of efficiency measurement are well known (Ho and Zhu 2004;Hasan 2005). In the context of Islamic banking, the most severe drawback is the assumption underlying financial ratios of cost minimisation or profit maximisation; these are unlikely to be the most pressing objectives in the context of Islamic banking (Abdul-Majid et al 2010).…”

Efficiency analysis of European Freight Villages: three peers for benchmarking

“…Although there is a wealth of literature on both basic and applied research in DEA, the most widely used models for DEA are the CCR and the BCC (Ho and Zhu 2004). The CCR model was initially proposed by Charnes et al (1978) under the assumption of constant returns to scale; while the BCC model, revised on the foundation of CCR model by Banker et al (1984) allowing variable returns to scale.…”