 Non-oriented slack-based decompositions of profit change with an application to Taiwanese bankingJia-Ching Juo, Tsu-Tan Fu and Ming-Miin Yu Omega, 2012, vol. 40, issue 5, 550-561 Abstract: A change in profit can originate from the output side and the input side. In the spirit of work by Tone [1] and follows Grifell-Tatjé and Lovell's [2], we propose a non-oriented slacks-based measure (SBM) model to decompose the change in the operating profit into various meaningful components: quantity effect and a price effect. The quantity effect can be decomposed into a productivity effect and an activity effect. The productivity effect is further decomposed into a technical effect and an operating efficiency effect. Both of them include an output side, which will result in a change in revenue and an input side which will result in a change in cost. The activity effect can be decomposed into a product mix effect, a resource mix effect and a scale effect. We illustrate our decompositions to the Taiwanese banking sector during the period 1994–2002 using the average of the base and current prices to evaluate these contributions. We find ignoring input side effects on the decomposition of profit changes would cause misleading results in managerial issues. Keywords: Profit change; Decomposition; Data envelopment analysis (DEA); Slacks; Slacks-based measure (SBM) (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jomega:v:40:y:2012:i:5:p:550-561 Ordering information: This journal article can be ordered from DOI: 10.1016/j.omega.2011.11.002 Access Statistics for this article Omega is currently edited by B. Lev More articles in Omega from Elsevier |
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