Disentangling the sources of bank inefficiency: a two-stage network multi-directional efficiency analysis approach

Jiawei Yang ()
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Jiawei Yang: Donghua University

Annals of Operations Research, 2023, vol. 326, issue 1, No 15, 369-410

Abstract: Abstract To disentangle the sources of bank inefficiency, this paper presents an extended two-stage network multi-directional efficiency analysis (NMEA) approach by taking the internal structure of the banking system into account. The proposed two-stage NMEA approach extends the conventional “black-box” MEA approach, providing a unique efficiency decomposition and identifying which variables drive the inefficiency for banking systems with a two-stage network structure. An empirical application of Chinese listed banks from 2016 to 2020 during the 13th Five-year Plan reveals that the overall inefficiency of sample banks is primarily sourced from the deposit-generating subsystem. Additionally, different types of banks display differentiated evolution modes over different dimensions, confirming the importance of applying the proposed two-stage NMEA approach.

Keywords: Banking; Data envelopment analysis; Multi-directional efficiency analysis; Two-stage; Non-performing loans (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10479-023-05335-0

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