Operational Efficiency Evaluation of Chinese Internet Banks: Two-Stage Network DEA Approach

Min Li (), Nan Zhu, Kai He and Minghui Li
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Min Li: School of Civil Engineering, Hubei Engineering University, Xiaogan 432000, China
Nan Zhu: Western Business School, Southwestern University of Finance and Economics, Chengdu 611130, China
Kai He: School of Management Science and Engineering, Southwestern University of Finance and Economics, Chengdu 611130, China
Minghui Li: School of Business, Wuhan Huaxia Institute of Technology, Wuhan 430223, China

Sustainability, 2022, vol. 14, issue 21, 1-18

Abstract: An in-depth study of the operational efficiency of Internet banks is essential to enhance banks’ competitiveness and sustainable development. We use the two-stage network data envelopment analysis (DEA) model to divide the operational process of Internet banks into the value operation stage (stage 1) and the value creation stage (stage 2). This paper adopts the R&D investment that reflects the characteristics of Internet banks as the input of the value operation stage in the two-stage DEA model. It examines the operating efficiency of China’s Internet banks from 2018 to 2019, including stage efficiency and comprehensive efficiency. The empirical analysis results indicate that the contribution of stage 2 to the comprehensive efficiency is higher than that of stage 1. Similarly, it can also be shown that the average values of the stage efficiency and comprehensive efficiency of Internet banking in 2019 are higher than those in 2018. In addition, the Kruskal–Wallis test shows no significant difference in the average comprehensive efficiency of Internet banks in the three major economic belts. These results have significant strategic implications for managers, regulators, and policymakers who share a common interest in boosting financial sustainability and performance.

Keywords: Internet banks; efficiency; two-stage network DEA; Kruskal–Wallis test (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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