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Book part
Publication date: 4 April 2024

Ren-Raw Chen and Chu-Hua Kuei

Due to its high leverage nature, a bank suffers vitally from the credit risk it inherently bears. As a result, managing credit is the ultimate responsibility of a bank. In this…

Abstract

Due to its high leverage nature, a bank suffers vitally from the credit risk it inherently bears. As a result, managing credit is the ultimate responsibility of a bank. In this chapter, we examine how efficiently banks manage their credit risk via a powerful tool used widely in the decision/management science area called data envelopment analysis (DEA). Among various existing versions, our DEA is a two-stage, dynamic model that captures how each bank performs relative to its peer banks in terms of value creation and credit risk control. Using data from the largest 22 banks in the United States over the period of 1996 till 2013, we have identified leading banks such as First Bank systems and Bank of New York Mellon before and after mergers and acquisitions, respectively. With the goal of preventing financial crises such as the one that occurred in 2008, a conceptual model of credit risk reduction and management (CRR&M) is proposed in the final section of this study. Discussions on strategy formulations at both the individual bank level and the national level are provided. With the help of our two-stage DEA-based decision support systems and CRR&M-driven strategies, policy/decision-makers in a banking sector can identify improvement opportunities regarding value creation and risk mitigation. The effective tool and procedures presented in this work will help banks worldwide manage the unknown and become more resilient to potential credit crises in the 21st century.

Details

Advances in Pacific Basin Business, Economics and Finance
Type: Book
ISBN: 978-1-83753-865-2

Keywords

Open Access
Article
Publication date: 15 December 2023

Nicola Castellano, Roberto Del Gobbo and Lorenzo Leto

The concept of productivity is central to performance management and decision-making, although it is complex and multifaceted. This paper aims to describe a methodology based on…

Abstract

Purpose

The concept of productivity is central to performance management and decision-making, although it is complex and multifaceted. This paper aims to describe a methodology based on the use of Big Data in a cluster analysis combined with a data envelopment analysis (DEA) that provides accurate and reliable productivity measures in a large network of retailers.

Design/methodology/approach

The methodology is described using a case study of a leading kitchen furniture producer. More specifically, Big Data is used in a two-step analysis prior to the DEA to automatically cluster a large number of retailers into groups that are homogeneous in terms of structural and environmental factors and assess a within-the-group level of productivity of the retailers.

Findings

The proposed methodology helps reduce the heterogeneity among the units analysed, which is a major concern in DEA applications. The data-driven factorial and clustering technique allows for maximum within-group homogeneity and between-group heterogeneity by reducing subjective bias and dimensionality, which is embedded with the use of Big Data.

Practical implications

The use of Big Data in clustering applied to productivity analysis can provide managers with data-driven information about the structural and socio-economic characteristics of retailers' catchment areas, which is important in establishing potential productivity performance and optimizing resource allocation. The improved productivity indexes enable the setting of targets that are coherent with retailers' potential, which increases motivation and commitment.

Originality/value

This article proposes an innovative technique to enhance the accuracy of productivity measures through the use of Big Data clustering and DEA. To the best of the authors’ knowledge, no attempts have been made to benefit from the use of Big Data in the literature on retail store productivity.

Details

International Journal of Productivity and Performance Management, vol. 73 no. 11
Type: Research Article
ISSN: 1741-0401

Keywords

Article
Publication date: 28 June 2022

Peter Wanke, Sahar Ostovan, Mohammad Reza Mozaffari, Javad Gerami and Yong Tan

This paper aims to present two-stage network models in the presence of stochastic ratio data.

Abstract

Purpose

This paper aims to present two-stage network models in the presence of stochastic ratio data.

Design/methodology/approach

Black-box, free-link and fix-link techniques are used to apply the internal relations of the two-stage network. A deterministic linear programming model is derived from a stochastic two-stage network data envelopment analysis (DEA) model by assuming that some basic stochastic elements are related to the inputs, outputs and intermediate products. The linkages between the overall process and the two subprocesses are proposed. The authors obtain the relation between the efficiency scores obtained from the stochastic two stage network DEA-ratio considering three different strategies involving black box, free-link and fix-link. The authors applied their proposed approach to 11 airlines in Iran.

Findings

In most of the scenarios, when alpha in particular takes any value between 0.1 and 0.4, three models from Charnes, Cooper, and Rhodes (1978), free-link and fix-link generate similar efficiency scores for the decision-making units (DMUs), While a relatively higher degree of variations in efficiency scores among the DMUs is generated when the alpha takes the value of 0.5. Comparing the results when the alpha takes the value of 0.1–0.4, the DMUs have the same ranking in terms of their efficiency scores.

Originality/value

The authors innovatively propose a deterministic linear programming model, and to the best of the authors’ knowledge, for the first time, the internal relationships of a two-stage network are analyzed by different techniques. The comparison of the results would be able to provide insights from both the policy perspective as well as the methodological perspective.

Details

Journal of Modelling in Management, vol. 18 no. 3
Type: Research Article
ISSN: 1746-5664

Keywords

Article
Publication date: 14 April 2023

Fatima Saeedi Aval Noughabia, Najmeh Malekmohammadi, Farhad Hosseinzadeh Lotfi and Shabnam Razavyan

The purpose of this paper is to improve the recent models for the evaluation of the efficiency of decision making units (DMUs) comprising a network structure with undesirable…

Abstract

Purpose

The purpose of this paper is to improve the recent models for the evaluation of the efficiency of decision making units (DMUs) comprising a network structure with undesirable intermediate measures and fuzzy data.

Design/methodology/approach

In this paper a three-stage network structure model with desirable and undesirable data is presented and is solved as linear triangular fuzzy planning problems.

Findings

A new three stage network data envelopment analysis (DEA) model is established to evaluate the efficiency of industries with undesirable and desirable indicators in fuzzy environment.

Practical implications

The implication of this study is to evaluate the furniture services and the chipboard industries of wood lumber as a three-stage process.

Originality/value

In some cases, DMUs include two or multi-stage process (series or parallel) operating with a structure called a network DEA. Also, in the real world problems, the data are often presented imprecisely. Additionally, the intermediate measures under the real-world conditions include desirable and undesirable data. These mentioned indexes show the value of the proposed model.

Details

International Journal of Intelligent Computing and Cybernetics, vol. 16 no. 4
Type: Research Article
ISSN: 1756-378X

Keywords

Article
Publication date: 13 July 2023

Ali Koç and Serap Ulusam Seçkiner

This study aims to investigate environmental efficiency based on energy change by using energy-related or nonenergy-related variables by reckoning with months and years as…

Abstract

Purpose

This study aims to investigate environmental efficiency based on energy change by using energy-related or nonenergy-related variables by reckoning with months and years as decision-making units (DMUs) for a hospital under radial and nonradial models.

Design/methodology/approach

The non-oriented slack-based measures (SBM)-data envelopment analysis (DEA) model considering desirable and undesirable outputs has been embraced in this study, where its obtained results were compared with the results of other DEA models are output-oriented SBM-DEA and Banker, Charnes, & Cooper-DEA. For this purpose, this research has used a data set covering the 2012–2018 period for a reference hospital, which includes energy-related and nonenergy-related variables.

Findings

The results demonstrate that environmental efficiency based on energy reached the highest level in the winter months, whereas the summer months have the lowest efficiency values arising from the increasing electricity consumption due to high cooling needs. According to results of the non-oriented SBM model, the month with the highest efficiency in all periods is January with a 0.936 average efficiency score, the lowest month is August with a 0.406 value.

Originality/value

This paper differs from other studies related to energy and environmental efficiencies in the literature with some aspects. First, to the best of the authors’ knowledge, this study is the first one that takes into account time periods (months and years) as (DMUs for a single organization. Second, this study investigates environmental nonefficiencies, which are derived from energy uses and factors affecting energy use.

Details

International Journal of Energy Sector Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1750-6220

Keywords

Article
Publication date: 5 May 2023

Muhamad Nafik Hadi Ryandono, Tika Widiastuti, Eko Fajar Cahyono, Dian Filianti, A. Syifaul Qulub and Muhammad Ubaidillah Al Mustofa

Zakat is an important Islamic economic instrument that plays significant role in Sustainable Development Goals. Accordingly, Zakat Institutions must manage zakat in a proper and…

Abstract

Purpose

Zakat is an important Islamic economic instrument that plays significant role in Sustainable Development Goals. Accordingly, Zakat Institutions must manage zakat in a proper and efficient manner. This study aims to examine the efficiency of Zakat Institutions based on their clusters which are government, business and social organizations.

Design/methodology/approach

This study uses three quantitative methods: data envelopment analysis (DEA), free disposal hull and super-efficiency DEA. The analytical method is based on production approach, variable return to scale assumption and output orientation. The sample consists of 14 Zakat Institutions from three clusters: Zakat Institutions managed by government, Zakat Institutions managed by corporation and Zakat Institution managed by social organizations.

Findings

The results revealed that all of three techniques culminate the same ranking order of efficiency. Zakat Institution managed by the government is the most efficient Zakat Institution, with the average value of 0.87 by using three approaches combined. Meanwhile, Zakat Institutions owned by company and social institutions cluster are in second and third position, with the average value of 0.65 and 0.4, respectively, based on the results of the three approaches. This study contends that the level of efficiency of Zakat Institutions may be supported by clusters (affiliations) in their management.

Research limitations/implications

This study’s limitation is the inadequacy of the required data. Nonetheless, this study provides insights to improve the efficiency of Zakat Institutions based on their clusters. Zakat Institutions in each cluster can improve their efficiency by optimizing inputs to produce multiple outputs.

Originality/value

This study enhances research on the efficiency of Zakat Institutions using three methods to assess the consistency and strength of Zakat Institutions’ efficiency values. In addition, this study examines the efficiency level of Zakat Institutions based on their clusters.

Details

Journal of Islamic Accounting and Business Research, vol. 14 no. 8
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 9 May 2022

Narendra N. Dalei and Jignesh M. Joshi

In India, the operational performance of the refinery is influenced by many factors. It is important to identify those key drivers which can assist the refineries to uphold and…

Abstract

Purpose

In India, the operational performance of the refinery is influenced by many factors. It is important to identify those key drivers which can assist the refineries to uphold and succeed in day-to-day production activities. Therefore, the purpose of this study is to evaluate the operational efficiency of seven Indian oil refineries during the period 2010 to 2018.

Design/methodology/approach

In this work, a two-stage empirical analysis is proposed. In the first stage, the data envelopment analysis (DEA) – variable return to scale model is used to evaluate the operational efficiency of the Indian oil refineries. The ordinary least square (OLS), random effect generalized least square (GLS) and Tobit model are used in the second stage to identify the key determinants of efficiency and to explain the variation in refinery efficiency.

Findings

The first-stage DEA results showed that the Numaligarh Refinery Limited and Chennai Petroleum Corporation Limited are found to be more efficient than the rest of the sampled refineries and attained their efficiency scores of 0.993 and 0.981, respectively, during the study period. The second-stage regression analysis suggested three explanatory variables: refinery structure, utilization rate and distillate yield, which are found to be significant in explaining variations in refinery efficiency.

Practical implications

This study provides valuable information that would help policymakers to formulate policies toward improving the efficiency of underperforming Indian refineries, which reduces the excessive use of resources and gives a competitive advantage.

Originality/value

This study proposes the first-ever application of the profit frontier DEA model for assessing the operational efficiency of oil refineries and explains the variation in refinery’s efficiency using OLS, GLS as well as the Tobit model.

Details

International Journal of Energy Sector Management, vol. 17 no. 3
Type: Research Article
ISSN: 1750-6220

Keywords

Article
Publication date: 21 December 2021

Adel Achi

The purpose of this paper is to evaluate the efficiency of Algerian banks and examine the effects of explanatory factors on their performance.

Abstract

Purpose

The purpose of this paper is to evaluate the efficiency of Algerian banks and examine the effects of explanatory factors on their performance.

Design/methodology/approach

In this paper, a methodology of two-stage network data envelopment analysis (DEA) is used to explore the efficiency of a sample of 13 Algerian banks during the 2013–2017 period. In the first stage, the network DEA is used to assess the overall and stages efficiencies. In the second stage, the partial least squares (PLS) regression is conducted to determine the potential effects of explanatory factors on stages efficiency.

Findings

The main empirical results indicate that Algerian banks need an efficiency improvement in both stages. The overall efficiency of the Algerian banking system improves over the study period. The deposit producing efficiency is positively affected by bank size and bank age. The revenue earning efficiency is negatively associated with bank size and bank age. The domestic banks are more efficient than foreign banks in the deposit producing stage and the foreign banks are more efficient than domestic banks in the revenue earning stage.

Practical implications

The results might be used as guidelines for both managers and policymakers in order to improve banks and banking system performance.

Originality/value

To the best of our knowledge, this study is the first that uses the DEA in investigating the efficiency of Algerian banks by dividing the overall efficiency into deposit producing and revenue earning efficiencies. Unlike most studies that have usually used OLS regression, Tobit regression and bootstrapped truncated regression, this study is the first in the bank efficiency literature that uses PLS regression to investigate the potential effect of explanatory variables on deposit producing and revenue earning efficiencies.

Details

International Journal of Productivity and Performance Management, vol. 72 no. 5
Type: Research Article
ISSN: 1741-0401

Keywords

Article
Publication date: 12 April 2023

Ioannis Tampakoudis, Nikolaos Kiosses and Konstantinos Petridis

The purpose of this study is to evaluate the performance of mutual funds during the COVID-19 pandemic with environmental, social and governance (ESG) criteria. The main research…

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Abstract

Purpose

The purpose of this study is to evaluate the performance of mutual funds during the COVID-19 pandemic with environmental, social and governance (ESG) criteria. The main research question is whether mutual fund performance differs with respect to the level of the mutual fund’s ESG score.

Design/methodology/approach

The data set contains global fund data, and mutual fund performance is analyzed using two types of data envelopment analysis (DEA) models: the DEA portfolio index (DPEI) and the range direction measure (RDM) DEA. Propensity score matching and logistic regression are also applied.

Findings

The results reveal that: nonequity mutual funds present significantly higher performance compared to the performance of equity mutual funds; mutual funds with high ESG scores are associated with significantly higher performance compared to those with low to medium ESG scores; funds with high ESG scores experience higher performance irrespective of their type; and efficiency scores derived from the RDM DEA are significantly higher than those derived from the DPEI model.

Research limitations/implications

Investors, fund managers and market participants can benefit from the findings of this study and improve their investment decision-making process, including more sustainable funds in their portfolios. Regulators and policymakers should further promote or even require the inclusion of more sustainable investments in the financial products offered by institutional investors. The main limitation of the study is related to data availability regarding the ESG score of mutual funds.

Originality/value

To the best of the authors’ knowledge, this is the first study that provides robust evidence in support of a positive association between ESG scores and mutual fund performance during the pandemic-induced crisis applying a DEA methodology.

Details

Corporate Governance: The International Journal of Business in Society, vol. 23 no. 7
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 12 July 2023

Monireh Jahani Sayyad Noveiri, Sohrab Kordrostami and Mojtaba Ghiyasi

The purpose of this study is to estimate inputs (outputs) and flexible measures when outputs (inputs) are changed provided that the relative efficiency values remain without…

Abstract

Purpose

The purpose of this study is to estimate inputs (outputs) and flexible measures when outputs (inputs) are changed provided that the relative efficiency values remain without change.

Design/methodology/approach

A novel inverse data envelopment analysis (DEA) approach with flexible measures is proposed in this research to assess inputs (outputs) and flexible measures when outputs (inputs) are perturbed on condition that the relative efficiency scores remain unchanged. Furthermore, flexible inverse DEA approaches proposed in this study are used for a numerical example from the literature and an application of Iranian banking industry to clarify and validate them.

Findings

The findings show that including flexible measures into the investigation effects on the changes of performance measures estimated and leads to more reasonable achievements.

Originality/value

The traditional inverse DEA models usually investigate the changes of some determinate input-output factors for the changes of other given input-output indicators assuming that the efficiency values are preserved. However, there are situations that the changes of performance measures should be tackled while some measures, called flexible measures, can play either input or output roles. Accordingly, inverse DEA optimization models with flexible measures are rendered in this paper to address these issues.

Details

Journal of Modelling in Management, vol. 19 no. 1
Type: Research Article
ISSN: 1746-5664

Keywords

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