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Data Envelopment Analysis on Relative Efficiency Assessment and Improvement: Evidence from Chinese Bank Branches

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Eurasian Business and Economics Perspectives

Part of the book series: Eurasian Studies in Business and Economics ((EBES,volume 21))

Abstract

By creating credits commercial banks contribute to the national economy and their branches are the catalysts of depositing, lending, and other associated activities. To comprehend the efficiency of commercial banks their branches must be brought under the microscope. The purpose of this chapter is to analyze the comparative efficiency of the bank branches from a micro point of view by introducing environmental changes. Firstly, we utilize Data Envelopment Analysis (DEA) to micro-analyze 18 bank branches of a Chinese commercial bank. Secondly, we decompose the effectiveness into efficiency and productivity to estimate the bank branches’ relative efficiency and productivity. To add, we also examine overall productivity along with average efficiency that assists in understanding each staff’s performance; this is a rarely investigated territory. Thirdly, we employ operating environment factors—a novel approach—with three dimensions (business conditions, competitiveness, and future development) to further detect and rank bank branches efficiency. We found that some branches performed efficiently (inefficiently) even in lower (higher) external environments; hence, locations and individual performance are vital influencers of bank branches’ efficiency. We recommend practical measures to improve the efficiency of inefficient branches in the areas of expense, revenue, and management; this will be beneficial for any commercial bank’s policy-making efforts.

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Author information

Authors and Affiliations

  1. Faculty of Economics, Kyushu University, Fukuoka, Japan

    Meifen Chu

  2. Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai, China

    Guangyuan Zhou & Wenfeng Wu

Authors
  1. Meifen Chu
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  2. Guangyuan Zhou
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  3. Wenfeng Wu
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Corresponding author

Correspondence to Meifen Chu .

Editor information

Editors and Affiliations

  1. Istanbul Medeniyet University, Fatih, Istanbul, Turkey

    Mehmet Huseyin Bilgin

  2. MUFG Union Bank, San Francisco, CA, USA

    Hakan Danis

  3. Department of Business Administration, School of Social Sciences, Reykjavik University, Reykjavik, Iceland

    Ender Demir

  4. Montpellier Business School, Montpellier, France

    Adam Zaremba

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Chu, M., Zhou, G., Wu, W. (2022). Data Envelopment Analysis on Relative Efficiency Assessment and Improvement: Evidence from Chinese Bank Branches. In: Bilgin, M.H., Danis, H., Demir, E., Zaremba, A. (eds) Eurasian Business and Economics Perspectives. Eurasian Studies in Business and Economics, vol 21. Springer, Cham. https://doi.org/10.1007/978-3-030-94036-2_9

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