Skip to main content

Integrating the two-stage of non-radial DEA model and BCG methods to evaluate the performance with strategic trajectory: a case study of securities industry

Abstract

The 2008 sub-prime mortgage crisis in the United States brought many financial institutions to the brink of bankruptcy. Securities firms were not immune to such issues, given their prominence in the financial market. Consequently, evaluating the performance of securities companies’ post-recession is important when determining how to confront market-shaking macroeconomic problems. Consequently, this paper employs a non-radial model of data envelopment analysis (DEA) to measure the performance of revival on Taiwan’s securities industry. The research findings suggest that Tachan Securities (TCS) outperformed its peers in the operational period immediately after the global financial crisis, while Capital Securities (CAPITAL) is the best performer in the profit-making period. This paper applies the Boston Consulting Group (BCG) Matrix to analyze strategic positioning and trajectory on the basis of the efficiency value of the two-stage of non-radial DEA model. In order to validate any variances between the efficiencies of different stages after the global financial crisis, this paper conducts non-parametric statistical analysis to examine the variances in the efficiency values of the single-stage and the two-stage model. Finally, the purpose is to understand the impact of the post-crisis environmental variables on the efficiency of the securities industry. The empirical findings can serve as a reference for industry management on the assessment of operating performances and profitability by the characteristic of radial efficiency. Decision-makers in the industry may also refer to the findings as a benchmarking tool for the evaluation of business performance after the global financial crisis.

This is a preview of subscription content, access via your institution.

References

  • Avkiran NK (2011) Association of DEA super-efficiency estimates with financial ratios: Investigating the case for Chinese banks. Omega 39(3):323–334

    Article  Google Scholar 

  • Boulatov A, Hatch BC, Johnson SA, Lei AY (2009) Dealer attention, the speed of quote adjustment to information, and net dealer revenue. J Banking Finance 33(8):1531–1542

    Article  Google Scholar 

  • Bayyurt N, Akin A (2014) Effects of Foreign Acquisitions on the Performance of Securities Firms: Evidence from Turkey. Procedia-Social and Behavioral Sciences 150(15):156–161

    Article  Google Scholar 

  • Boston Consulting Group (1970) Perspectives on experience. Boston Consulting Group

  • Charnes A, Cooper WW, Rhodes E (1978) Measuring the efficiency of decision making units. Eur J Oper Res 2(6):429–444

    Article  Google Scholar 

  • Chen YC, Chiu YH, Huang CW, Tu CH (2013a) The analysis of bank business performance and market risk—Applying Fuzzy DEA. Econ Model 32:225–232

    Article  Google Scholar 

  • Chen Y, Cook WD, Kao C, Zhu J (2013b) Network DEA pitfalls: divisional efficiency and frontier projection under general network structures. Eur J Oper Res 226(3):507–515

    Article  Google Scholar 

  • Claessens S, Dell’Ariccia G, Igan D, Laeven L (2010) Cross-country experiences and policy implications from the global financial crisis. Economic Policy 25(62):267–293

    Article  Google Scholar 

  • Chen Y, Zhu J (2004) Measuring information technology’s indirect impact on firm performance. Inf Technol Manage 5(1):9–22

    Article  Google Scholar 

  • Chen Y, Liang L, Yang F, Zhu J (2006) Evaluation of information technology investment: a data envelopment analysis approach. Comput Oper Res 33(5):1368–1379

    Article  Google Scholar 

  • Chen Y, Sherman HD (2004) The benefits of non-radial vs. radial super-efficiency DEA: an application to burden-sharing amongst NATO member nations. Socio-Economic Plann Sci 38(4):307–320

    Article  Google Scholar 

  • Ding CG, Wu CH, Chang PL (2013) The influence of government intervention on the trajectory of bank performance during the global financial crisis: a comparative study among Asian economies. J Financial Stab 9(4):556–564

    Article  Google Scholar 

  • Demirbag, M., McGuinness, M., Akin, A., Bayyurt, N., & Basti, E. (2016). The professional service firm (PSF) in a globalised economy: A study of the efficiency of securities firms in an emerging market. International Business Review, 25(5), 1089–1102.

  • Du J, Liang L, Chen Y, Cook WD, Zhu J (2011) A bargaining game model for measuring performance of two-stage network structures. Eur J Operation Res 210(1):390–397

    Article  Google Scholar 

  • Demirbag M, Tatoglu E, Glaister KW, Zaim S (2010) Measuring strategic decision making efficiency in different country contexts: a comparison of British and Turkish firms. Omega 38:95–104

    Article  Google Scholar 

  • Demirbag M, Tatoglu E, Glaister K (2007) Factors influencing perceptions of performance: the case of western FDI in an emerging market. Int Bus Rev 16(3):310–336

    Article  Google Scholar 

  • Ebrahimnejad A, Tavana M, Lotfi FH, Shahverdi R (2014) A three-stage Data Envelopment Analysis model with application to banking industry. Measurement 49:308–319

    Article  Google Scholar 

  • Fukuyama H, Weber WL (2010) A slacks-based inefficiency measure for a two-stage system with bad outputs. Omega 38(5):398–409

    Article  Google Scholar 

  • Fukuyama H, Matousek R (2017) Modelling bank performance: A network DEA approach. Eur J Oper Res 259(2):721–732

    Article  Google Scholar 

  • Fukuyama H, Weber WL (1999) The efficiency and productivity of Japanese securities firms, 1988-93. Japan and the World Economy, 11(1), 115–133

  • Fang CY, Hu JL (2012) Environment and Statistical Noise-adjusted Efficiency under Zero-sum Gains with an Application to Securities Firms.Taiwan Journal of Applied Economics.1–37

  • Farrell MJ (1957) The measurement of productive efficiency.Journal of the Royal Statistical Society. Series A (General),253–290

  • Fenn P, Vencappa D, Diacon S, Klumpes P, O’Brien C (2008) Market structure and the efficiency of European insurance companies: a stochastic frontier analysis. J Banking Finance 32(1):86–100

    Article  Google Scholar 

  • Goldberg LG, Hanweck GA, Keenan M, Young A (1991) Economies of scale and scope in the securities industry. J Banking Finance 15(1):91–107

    Article  Google Scholar 

  • Gutierrez-Nieto B, Serrano-Cinca C, Molinero CM (2007) Microfinance institutions and efficiency. Omega 35(2):131–142

    Article  Google Scholar 

  • Gutiérrez-Nieto B, Serrano-Cinca C, Molinero CM (2009) Social efficiency in microfinance institutions. J Oper Res Soc 60(1):104–119

    Article  Google Scholar 

  • Halkos GE, Tzeremes NG (2013) Estimating the degree of operating efficiency gains from a potential bank merger and acquisition: a DEA bootstrapped approach. J Banking Finance 37(5):1658–1668

    Article  Google Scholar 

  • Ho CT, Zhu DS (2004) Performance measurement of Taiwan’s commercial banks. Int J Productivity Perform Manage 53(5):425–434

    Article  Google Scholar 

  • Khoshroo A, Mulwa R (2014) Improving Energy Efficiency Using Data Envelopment Analysis: A Case of Walnut Production. Managing Service Productivity. Springer, Berlin, Heidelberg, pp 227–240

    Google Scholar 

  • Kao C, Hwang SN (2008) Efficiency decomposition in two-stage data envelopment analysis: An application to non-life insurance companies in Taiwan. Eur J Oper Res 185(1):418–429

    Article  Google Scholar 

  • Kao C (2009) Efficiency decomposition in network data envelopment analysis: A relational model. Eur J Oper Res 192(3):949–962

    Article  Google Scholar 

  • Li Z, Crook J, Andreeva G (2017) Dynamic prediction of financial distress using Malmquist DEA. Expert Syst Appl 80:94–106

    Article  Google Scholar 

  • Li Y, Chen Y, Liang L, Xie J (2012) DEA models for extended two-stage network structures. Omega 40(5):611–618

    Article  Google Scholar 

  • Lin CS, Lin CY (2018) An Empirical Study of Efficiency Evaluation with Dynamic Strategy Trajectory Based on DEA Algorithm and BCG Model: A Case Study of Securities Industry. J Social Sci 14:91–106

    Google Scholar 

  • Liu S (2008) Commission deregulation and performance of securities firms: Further evidence from Japan. J Econ Bus 60(4):355–368

    Article  Google Scholar 

  • Macpherson AJ, Principe PP, Shao Y (2013) Controlling for exogenous environmental variables when using data envelopment analysis for regional environmental assessments. J Environ Manage 119:220–229

    Article  Google Scholar 

  • Meepadung N, Tang JC, Khang DB (2009) IT-based banking services: Evaluating operating and profit efficiency at bank branches. J High Technol Manage Res 20(2):145–152

    Article  Google Scholar 

  • Simar L, Wilson PW (2011) Two-stage DEA: caveat emptor. J Prod Anal 36(2):205–218

    Article  Google Scholar 

  • Soetanto TV, Fun LP (2015) Super Slack-Based Model Efficiency and Stock Performance of Manufacturing Industry Listed in Indonesian Stock Exchange. Procedia-Social and Behavioral Sciences 211:1231–1239

    Article  Google Scholar 

  • Staub RB, da Silva e Souza G, Tabak BM (2010) Evolution of bank efficiency in Brazil: A DEA approach. Eur J Oper Res 202(1):204–213

    Article  Google Scholar 

  • Tavana M, Khalili-Damghani K (2014) A new two-stage Stackelberg fuzzy data envelopment analysis model. Measurement 53:277–296

    Article  Google Scholar 

  • Tone K (2001) A slacks-based measure of efficiency in data envelopment analysis. Eur J Oper Res 130(3):498–509

    Article  Google Scholar 

  • Tone K (2002) A slacks-based measure of super-efficiency in data envelopment analysis. Eur J Oper Res 143(1):32–41

    Article  Google Scholar 

  • Reinhart CM, Rogoff KS (2009) Is the 2007 US sub-prime financial crisis so different? An international historical comparison. Panoeconomicus 56(3):291–299

    Article  Google Scholar 

  • Widiarto I, Emrouznejad A, Anastasakis L (2017) Observing choice of loan methods in not-for-profit microfinance using data envelopment analysis. Expert Syst Appl 82:278–290

    Article  Google Scholar 

  • Wanke P, Maredza A, Gupta R (2017) Merger and Acquisitions in South African Banking: A Network DEA Model. Res Int Bus Finance 41:362–376

    Article  Google Scholar 

  • World Bank (2009) Swimming against the tide: How developing countries are coping with the global crisis. Horsham, United Kingdom, pp 1–21

    Google Scholar 

  • Wang K, Huang W, Wu J, Liu YN (2014) Efficiency measures of the Chinese commercial banking system using an additive two-stage DEA. Omega 44:5–20

    Article  Google Scholar 

  • Wang KL, Tseng YT, Weng CC (2003) A study of production efficiencies of integrated securities firms in Taiwan. Appl Financ Econ 13(3):159–167

    Article  Google Scholar 

  • Xiaofang W, Kesheng C (2009) An Analysis on Dynamic Efficiency of China Securities Industry. Industrial Econ Res 2:1–8

    Google Scholar 

  • Young ZW (2011) The development and supervision of securities industry in Taiwan (Chinese). Securities and Futures Monthly 29(9):32–40

    Google Scholar 

  • Yeh CP, Wang KM, Chai KC (2010) Measuring the efficiency of securities companies by corporate governance in a financial holding and non-financial holding system. Expert Syst Appl 37(6):4671–4679

    Article  Google Scholar 

  • Zhang WD, Zhang S, Luo X (2006) Technological progress, inefficiency, and productivity growth in the US securities industry 1980–2000. J Bus Res 59:589–594

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Chun-Yueh Lin.

Additional information

Publisher’s Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Electronic Supplementary Material

Below is the link to the electronic supplementary material.

Supplementary Material 1

About this article

Verify currency and authenticity via CrossMark

Cite this article

Lin, CY. Integrating the two-stage of non-radial DEA model and BCG methods to evaluate the performance with strategic trajectory: a case study of securities industry. Port Econ J (2022). https://doi.org/10.1007/s10258-022-00206-1

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • DOI: https://doi.org/10.1007/s10258-022-00206-1

Keywords

  • Global financial crisis
  • Two-stage data envelopment analysis (DEA)
  • Non-radial model
  • Securities industry
  • BCG Matrix
  • Environmental variables