An Explanation for the Paradox Phenomenon in Taiwan¡¯s Bank Performances

Ming-Chung Chang ()

International Journal of Financial Research, 2014, vol. 5, issue 1, 21-28

Abstract: A traditional DEA (data envelopment analysis) model is useful for estimating the best performances for a successful and a more efficiency DMU (decision-making unit). This study uses a traditional DEA model to estimate the efficiency score of bank z in Taiwan and get a good efficiency score based on the 2006 data, however the bank z was taken over by the government in early 2007. In illustrating this paradox phenomenon, the study reconsiders the tradition DEA model by contributing a worst-practice frontier under a traditional DEA model. Findings: the bank z is located on the intersection of the worst-practice frontier and the traditional DEA model frontier. This study provides a critical determinant of a bank¡¯s failure that a bank has a location such as the bank z.

Keywords: performance; efficiency; worst-practice frontier; bank¡¯s failure (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:jfr:ijfr11:v:5:y:2014:i:1:p:21-28

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