Application of DEA in analyzing a bank’s operating performance

This article takes 117 branches of a certain bank in Taiwan in 2006 as the research subject and introduces data envelopment analysis (DEA) to evaluate the operating performances of business units of this bank to provide the reference for a bank’s managers in determining operation strategies. The result indicates that, in overall technical efficiency, the case bank has many inefficient branches distinctly; the average overall technical efficiency of branches is 54.8% and the average pure technical efficiency of branches is 67%, which is probably because of lower loan-to-deposit ratio, leading to excessive input waste. The average scale efficiency of the case bank during the sample period is 82%. The ratio of resource waste due to technical inefficiency is 45.2%, of which 55.03% is due to pure technical inefficiency.