Using Data Envelopment Analysis (DEA) to the efficiency evaluation and improvement of a Taiwanese commercial bank

Performance evaluation is one of the most serious concerns for managers, since it can be used as a reference in decision making with regard to such issues as budget distribution and performance bonuses. Data Envelopment Analysis (DEA) is a widely utilized methodology for the performance evaluation of a group of business units, and it generally classifies many business units as efficient, since it is based on the standpoint of individual units. However, for performance evaluation, the best efficiency of individual units may not ensure the best performance of their headquarters. This study thus applies an aggregate DEA model to the efficiency evaluation of a commercial bank company. The advantages of this application are that it can not only attain the aggregate efficiency score of the headquarters, but can also obtain the efficiencies of bank branches. To this end, this study identifies the improvement targets of specific factors for inefficient units, and thus managers can know what to work on in order to enhance competitiveness in a challenging economic climate.