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1 – 10 of 464Due 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.
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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.
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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.
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Fazıl Gökgöz, Engin Yalçın and Noor Ayoob Salahaldeen
The banking industry, which is one of the most significant industries when taking into account both deposit sizes and employment statistics in Turkey, is one of the country's…
Abstract
Purpose
The banking industry, which is one of the most significant industries when taking into account both deposit sizes and employment statistics in Turkey, is one of the country's primary economic drivers. In this regard, it is highly important to evaluate banks as it is necessary to present to what extent they use their resources efficiently. The main purpose of the study is to analyze the efficiencies of Turkish banks by the two-stage data envelopment analysis (DEA) and Malmquist productivity index (MPI).
Design/methodology/approach
The authors aim to analyze both the efficiency and productivity of Turkish banks by two-stage DEA and the MPI, which enable decomposing into sub-sections of production processes. Hence, more detailed insight into the Turkish banking system can be presented through two-stage efficiency and production approaches.
Findings
DEA results indicate that two out of three state-owned banks achieved resource efficiency while none of the investigated banks performed profit efficiency throughout the investigated period. Besides, average resource efficiency is found higher than average profit efficiency in Turkish banks. MPI results reveal that both technological and technical improvement prospects exist for Turkish banks.
Originality/value
The original contribution of this paper is to employ two-stage DEA and the MPI, which reflect both the static and dynamic performance of the Turkish banking sector. In this regard, this study aims to be a pioneer by both reflecting the static and dynamic performance analysis of Turkish banks.
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Yongfeng Zhu, Zilong Wang and Jie Yang
The existing three-stage network Data Envelopment Analysis (DEA) models with shared input are self-assessment model that are prone to extreme efficiency scores in pursuit of…
Abstract
Purpose
The existing three-stage network Data Envelopment Analysis (DEA) models with shared input are self-assessment model that are prone to extreme efficiency scores in pursuit of decision-making units (DMUs) efficiency maximization. This study aims to solve the sorting failure problem of the three-stage network DEA model with shared input and applies the proposed model to evaluate innovation resource allocation efficiency of Chinese industrial enterprises.
Design/methodology/approach
A three-stage network cross-DEA model considering shared input is proposed by incorporating the cross-efficiency model into the three-stage network DEA model. An application of the proposed model in the innovation resource allocation of industrial enterprise is implemented in 30 provinces of China during 2015–2019.
Findings
The efficiency of DMU would be overestimated if the decision-maker preference is overlooked. Moreover, the innovation resource allocation performance of Chinese industrial enterprises had a different spatial distribution, with high in eastern and central China and low in western China. Eastern China was good at knowledge production and technology development but not good at commercial transformation. Northeast China performed well in technology development and commercial conversion but not in knowledge production. The central China did not perform well in terms of technology development.
Originality/value
A three-stage network DEA model with shared input is proposed for the first time, which makes up for the problem of sorting failure of the general three-stage network model.
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This study aims at evaluating the technical efficiency (TE) of healthcare systems in the Arab region and exploring the key factors that affect the efficiency performance.
Abstract
Purpose
This study aims at evaluating the technical efficiency (TE) of healthcare systems in the Arab region and exploring the key factors that affect the efficiency performance.
Design/methodology/approach
The study applies a two-stage Data Envelopment Analysis (DEA) approach to a sample of 20 Arab countries. In the first stage, a DEA model is used to calculate the TE scores of the examined healthcare systems in 2019 and 2010, following both the output and input orientations of efficiency. In the second stage, a censored Tobit model is estimated to investigate the determinants of healthcare efficiency.
Findings
DEA results of 2019 indicate that achievable efficiency gains of the Arab countries range from 0.4% to 16% under the output and input orientations, respectively. Six countries are efficient under both orientations. Although the average efficiency scores of the Arab countries have deteriorated between 2010 and 2019, Djibouti and Sudan had the greatest efficiency improvements between the two years. Bahrain, Mauritania, Morocco and Qatar proved to be efficient in 2010 and 2019 under the two orientations of efficiency and according to the two DEA specifications followed. The Tobit model reveals that corruption and government health expenditure tend to have an adverse impact on healthcare efficiency.
Originality/value
The author evaluates healthcare efficiency and healthcare's efficiency determinants in the Arab countries. Regardless Arab countries' diversity, these countries are facing common health challenges, including diminishing role of governments in healthcare financing; increased out-of-pocket healthcare spending; poor healthcare outputs and prevalence of health inequities resulting from weak governance institutions. Comparing the efficiency of healthcare systems between 2010 and 2019 gives insights on the potential impact of the Arab spring uprisings on healthcare efficiency. Moreover, examining the determinants of healthcare efficiency allows for better understanding of how to improve the efficiency of healthcare systems in the region.
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Shahin Rajaei Qazlue, Ahmad Mehrabian, Kaveh Khalili-Damghani and Mohammad Amirkhan
Because of the importance of the wheat industry in the economy, a real-featured performance measurement approach is essential for the wheat production process. The purpose of this…
Abstract
Purpose
Because of the importance of the wheat industry in the economy, a real-featured performance measurement approach is essential for the wheat production process. The purpose of this paper is to develop a data envelopment analysis (DEA) model that is fully compatible with the wheat production process so that managers and farmers can use it to evaluate the efficiency of wheat farms for strategic decisions.
Design/methodology/approach
A dynamic multi-stage network DEA model is developed to evaluate the efficiency of wheat production farms in short-term (two-year) and long-term (eight-year) periods.
Findings
The results of this study show that because of the lack of long-term planning and excessive reliance on rain, most of the investigated regions have no stability in efficiency, and the efficiency of the regions changes in a zigzag manner over time. Among studied regions, only the Hashtrood region has high and stable efficiency, and other regions can follow the example of this region's cultivation method.
Originality/value
To the best of the authors’ knowledge, this study is the first one that uses the dynamic multi-stage network DEA considering every other year cultivation method and direct–indirect inputs in the agricultural section.
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Yongtong Chen and William Chung
Sustainable supplier selection is of vital importance in sustainability decision of supply chain under carbon neutrality. Multi-criteria decision-making approaches are widely used…
Abstract
Purpose
Sustainable supplier selection is of vital importance in sustainability decision of supply chain under carbon neutrality. Multi-criteria decision-making approaches are widely used in sustainable supplier selection and generally classified the involved criteria into three sustainable development (SD) dimensions: Environmental, Social and Economic. During the assignment of appropriate weighted scores to the criteria, most of the methods considered mutually exclusive criteria. However, some criteria cover multidimensions since ambiguity vagueness makes them difficult to classify into one dimension exclusively. The purpose of this paper is to find proper approaches addressed to multidimensional overlapping criteria in the evaluation of suppliers’ sustainability performance.
Design/methodology/approach
This study proposes three approaches to resolve the multidimensional overlapping criteria issue by data envelopment analysis (DEA) methods. The first approach uses all dimensional criteria and “dimensional overlapping criteria” in a single DEA model. The second approach consists of two-stage DEA. The first stage is to find SD dimensional performances, which are used in the second stage. The third approach uses an aggregate weight-constrained DEA model with additional constraints. Such approaches are applied to an empirical case study with six dimensions.
Findings
Results indicate that the third approach is better than the first two approaches in balancing the development among all dimensions instead of focusing on the superiority dimension to obtain high performance.
Originality/value
Discussing overlapping criteria in the context of sustainable supplier evaluation and other multi-criteria evaluation have a noticeable impact on evaluation systems, but appropriate approaches for this issue are currently under-researched.
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Yasaman Zibaei Vishghaei, Sohrab Kordrostami, Alireza Amirteimoori and Soheil Shokri
Assessing inputs and outputs is a significant aspect of taking decisions while there are complex and multistage processes in many examinations. Due to the presence of interval…
Abstract
Purpose
Assessing inputs and outputs is a significant aspect of taking decisions while there are complex and multistage processes in many examinations. Due to the presence of interval performance measures in various real-world studies, the purpose of this study is to address the changes of interval inputs of two-stage processes for the perturbations of interval outputs of two-stage systems, given that the overall efficiency scores are maintained.
Design/methodology/approach
Actually, an interval inverse two-stage data envelopment analysis (DEA) model is proposed to plan resources. To illustrate, an interval two-stage network DEA model with external interval inputs and outputs and also its inverse problem are suggested to estimate the upper and lower bounds of the entire efficiency and the stages efficiency along with the variations of interval inputs.
Findings
An example from the literature and a real case study of the banking industry are applied to demonstrate the introduced approach. The results show the proposed approach is suitable to estimate the resources of two-stage systems when interval measures are presented.
Originality/value
To the best of the authors’ knowledge, there is no study to estimate the fluctuation of imprecise inputs related to network structures for the changes of imprecise outputs while the interval efficiency of network processes is maintained. Accordingly, this paper considers the resource planning problem when there are imprecise and interval measures in two-stage networks.
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Jianhua Zhu, Luxin Wan, Huijuan Zhao, Longzhen Yu and Siyu Xiao
The purpose of this paper is to provide scientific guidance for the integration of industrialization and information (TIOII). In recent years, TIOII has promoted the development…
Abstract
Purpose
The purpose of this paper is to provide scientific guidance for the integration of industrialization and information (TIOII). In recent years, TIOII has promoted the development of intelligent manufacturing in China. However, many enterprises blindly invest in TIOII, which affects their normal production and operation.
Design/methodology/approach
This study establishes an efficiency evaluation model for TIOII. In this paper, entropy analytic hierarchy process (AHP) constraint cone and cross-efficiency are added based on traditional data envelopment analysis (DEA) model, and entropy AHP–cross-efficiency DEA model is proposed. Then, statistical analysis is carried out on the integration efficiency of enterprises in Guangzhou using cross-sectional data, and the traditional DEA model and entropy AHP–cross-efficiency DEA model are used to analyze the integration efficiency of enterprises.
Findings
The data show that the efficiency of enterprise integration is at a medium level in Guangzhou. The efficiency of enterprise integration has no significant relationship with enterprise size and production type but has a low negative correlation with the development level of enterprise integration. In addition, the improved DEA model can better reflect the real integration efficiency of enterprises and obtain complete ranking results.
Originality/value
By adding the entropy AHP constraint cone and cross-efficiency, the traditional DEA model is improved. The improved DEA model can better reflect the real efficiency of TIOII and obtain complete ranking results.
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