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Evaluating the financial performance of bank branches

Jesus Pastor, C. Lovell and Henry Tulkens ()

No 2003094, CORE Discussion Papers from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: In this paper we evaluate the financial performance of virtually all of the branch offices of a large European savings bank for a recent six-month accounting period. We employ a complementary pair of nonparametric techniques to evaluate their financial performance, in terms of their ability to conserve on the expenses they incur in the process of building their customer bases and providing customer services valued by the bank. We find substantial variation in the ability of branch offices to perform this task, and substantial agreement on the identity of the branches at the bottom of the performance distribution. We then employ parametric techniques to determine that the list of indicators on which their financial performance is currently evaluated can be substantially reduced without statistically significant loss of information to bank management. Both findings suggest ways in which the bank can increase the profitability of its branch network.

Keywords: banking; performance indicators; efficiency (search for similar items in EconPapers)
JEL-codes: D20 G21 C60 (search for similar items in EconPapers)
Date: 2003-12
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Journal Article: Evaluating the financial performance of bank branches (2006) Downloads
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Working Paper: Evaluating the financial performance of bank branches (2006) Downloads
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