Measuring operational efficiency: an approach based on the data envelopment analysis

Many small and medium-sized Taiwanese trust businesses (SMEs) have been reorganised into commercial banks in recent times. Knowledge of their operational efficiency before and after their reorganisation is vital for managers to identify and eradicate problems at the early stage of the reorganisation. However, the measuring process is difficult because financial data is often incomplete or unclear. This paper applies a data envelopment analysis (DEA) model to assist manager in evaluating banking performance before and after reorganisation. The result indicates that DEA models can be successfully applied in evaluating bank performance.

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