Evaluation of Bank Innovation Efficiency with Data Envelopment Analysis: From the Perspective of Uncovering the Black Box between Input and Output

Kaiyang Zhong, Chenglin Li and Qing Wang
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Kaiyang Zhong: School of Economic Information Engineering, Southwestern University of Finance and Economics, Chengdu 611130, China
Chenglin Li: School of Economic Information Engineering, Southwestern University of Finance and Economics, Chengdu 611130, China
Qing Wang: Chongqing College of Electronic Engineering, Chongqing 401331, China

Mathematics, 2021, vol. 9, issue 24, 1-18

Abstract: The evaluation of corporation operation efficiency (especially innovation efficiency) has been always a hot topic. The currently popular evaluation methods are data envelopment analysis (DEA) and its improved methods. However, these methods have the following problems: the production process is regarded as a black box, and the actual production relationship between input and output is not analyzed. To solve these problems: (1) the black box theory and production function theory are introduced to uncover the black box of input and output; (2) regression models are used to alleviate the multicollinearity problem of inputs, and the most appropriate model of production relationship is selected; and (3) the results of the production function are compared with the results of the efficiency evaluation from multiple perspectives. Taking rural commercial banks in China as examples to evaluate their innovation efficiency, this article shows the following: (1) with the black box theory and production function theory, the staff, equipment, and intermediate business cost are suitable as innovation input variables, and intermediate business income is suitable as an innovation output variable; (2) the main challenges faced by rural commercial banks are reducing the reliance on human capital investment, strengthening technological innovation, and improving the efficiency of intermediate business cost management, which is hard to reveal with traditional DEA. The method proposed in this article provides an applicable reference for improving DEA method analysis.

Keywords: innovation efficiency; data envelopment analysis; black box theory; production function theory (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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