Non-Parametric Model for Evaluating the Performance of Chinese Commercial Banks’ Product Innovation

Luning Shao, Jianxin You, Tao Xu and Yilei Shao
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Luning Shao: School of Economics and Management, Tongji University, Shanghai 200092, China
Jianxin You: School of Economics and Management, Tongji University, Shanghai 200092, China
Tao Xu: School of Economics and Management, Tongji University, Shanghai 200092, China
Yilei Shao: School of Economics and Management, Tongji University, Shanghai 200092, China

Sustainability, 2020, vol. 12, issue 4, 1-15

Abstract: A thorough analysis of commercial banks’ product innovation performance is essential to promoting bank product innovation capabilities and sustainable development. In this paper, the product innovation performance of commercial banks is defined as the conversion efficiency of input and output factors. The credit risk of product innovation of banks is considered as an undesirable output and incorporated in the performance evaluation system. Depending on whether there is a synchronous relationship between innovation income and risks, a Fixed Correlation model (FCM) and a Variable Correlation model (VCM) are then constructed based on Data Envelopment Analysis (DEA) method for the evaluation of commercial bank product innovation performance. In addition, an output optimization model of the objective function is also constructed to estimate the target income of commercial banks’ product innovation in the FCM and VCM. Finally, the proposed model is applied to Chinese listed commercial banks for estimating the performance and target income of product innovation.

Keywords: data envelopment analysis; commercial banks; product innovation; performance evaluation; innovation risk (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
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