A decision model to predict profitability using revised Thompson–Thrall profit ratios in DEA with an application to South Asian banks

P. Sunil Dharmapala and Piyadasa Edirisuriya

International Journal of Operational Research, 2011, vol. 12, issue 4, 407-429

Abstract: Many researchers in the past have addressed the issue of profitability of banks from different perspectives using financial ratios and decision models. Thompson et al. (1995) introduced linked-cone (LC) profit ratios with assurance regions (AR) in data envelopment analysis. In this paper, we revise LC–AR and show a contrast between Thompson–Thrall’s and revised profit ratios. We propose a decision model to classify banks as profit-makers, loss-makers or neither, when ‘market prices’ that form AR are not available and hence LC–AR profit ratios do not exist. We demonstrate how this method works for a set of South Asian banks.

Keywords: Malmquist DEA; data envelopment analysis; assurance regions; linked-cone; profitability; profit ratios; efficiency; Robert Thrall; Gerald Thompson; financial ratios; decision models; banks; banking; profit-makers; loss-makers; market prices; South Asia; operational research. (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.inderscience.com/link.php?id=43550 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijores:v:12:y:2011:i:4:p:407-429

Access Statistics for this article

More articles in International Journal of Operational Research from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().