Bank branch operating efficiency: A comparative application of DEA and the loglinear model

Abstract

In this paper, a comparison regarding the operational efficiency of individual branches of a bank is made, through the application to the same body of data of two different estimation methods: (i) Data Envelopment Analysis (DEA) and (ii) Loglinear Model Analysis. In addition to that, the study examines whether operations in the bank branches were conducted in regions of increasing, constant or decreasing returns to scale. The DEA results suggest that increasing, constant or decreasing returns to scale may be observed in different regions of the production function, whereas the Loglinear model suggests that increasing returns to scale are in operation. © 1991.