Modeling the effect of cost factors on productivity growth using data envelopment analysis

The role of some factors such as efficiency, rule and regulations, and balance have been already investigated in the context of productivity analysis based on data envelopment analysis models. Along with the studies that take the role of cost factors into account, this paper presents a novel four-component decomposition of Malmquist productivity growth index from a financial point of view. The cost efficiency model applied here uses assurance region weight restrictions to increase discrimination power of basic data envelopment analysis models. In the proposed decomposition, the proportion of cost efficiency changes during two time periods is determined as a quantity measure between zero and one. A real case study from banking industry including 66 branches located in east Tehran is employed to show the applicability of the proposed methods and the results were been analyzed.