Journal of Productivity Analysis

, Volume 27, Issue 2, pp 123–136

Intra- and inter-country bank branch assessment using DEA

Article

Abstract

Increasingly globalized financial markets with considerable activity in the multinational sector have created the need to understand inter-country bank branch performance. This topic is relatively unstudied, primarily due to the immense difficulty encountered in gathering reliable data. Fortunately, we have been able to obtain data on a group of banks operating in one geographical market area, but in different countries. In this paper we critically assess bank branch profitability and productivity in seven national branch networks owned and operated by a multi-national financial services corporation. The corporate head office (owner) imposes its management philosophy equally on all of its subsidiaries, thus removing executive managerial and corporate disparity. Results suggest that countries in which branch performance is quite consistent amongst domestic branches are less productive and less profitable when compared to other countries that have more disparity in their efficiency scores. In addition, we discovered that, surprisingly, branches do not have to be productive in order to be profitable and this led us to somewhat of a major breakthrough in inter-country branch analysis. Significant managerial advice may be derived from these results vis-à-vis trans-national benchmarking and opportunity for performance improvements both at the branch level and nationally as well.

Keywords

DEA Profitability Bank branch efficiency Inter-country benchmarking Productivity and profitability 

JEL Classifications

L84 

Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  1. 1.CIBC Process EngineeringTorontoCanada
  2. 2.Centre for Management of Technology and EntrepreneurshipUniversity of TorontoTorontoCanada

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