Benchmarking the Bank Branch Efficiency Through a New Dynamic Network DEA Model

Abstract

This study proposes a new model by incorporating a carry-over input and segregating the branch production process into operational and investment divisions. Using a dataset of 121 Taiwanese branches, the findings were as follows: First, the overall efficiencies of bank branches are not on par regardless of investment or operational efficiencies. Second, the operational efficiencies of branches do not differ statistically between regions, although investment efficiencies do. Third, clustering the efficiency of branches based on characteristics provided evidence that branches located in industrial areas have a higher level of operational efficiency (and second highest investment efficiency) compared to other locations.