The role of bank affiliation in bank efficiency: a fuzzy multi-objective data envelopment analysis approach

Sabri Boubaker, Duc Do, Helmi Hammami and Kim Cuong Ly
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Helmi Hammami: ESC [Rennes] - ESC Rennes School of Business
Kim Cuong Ly: Nottingham University Business School [Nottingham]

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Abstract: This paper examines differences in bank efficiency between banks affiliated with single-bank holding companies and those affiliated with multi-bank holding companies by applying a fuzzy multi-objective two-stage data envelopment analysis technique. Using a sample of U.S. commercial banks covering 1994–2018, the results show that banks affiliated with multi-bank holding companies are more efficient than those affiliated with single-bank holding companies, suggesting that the former takes advantage of their parents' resources to enhance their efficiency, consistent with the internal capital market theory. They also show that banks with a powerful CEO exhibit lower efficiency than others. Moreover, there is an inverted U shape relationship between multi-bank holding company structure and bank efficiency, suggesting the presence of an optimal number of multi-bank holding subsidiaries that maximizes efficiency.

Keywords: Bank holding companies; Bank efficiency; CEO power; Multi-objective programming; Data envelopment analysis (search for similar items in EconPapers)
Date: 2022-04
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Published in Annals of Operations Research, 2022, 311 (2), pp.611-639. ⟨10.1007/s10479-020-03817-z⟩

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Journal Article: The role of bank affiliation in bank efficiency: a fuzzy multi-objective data envelopment analysis approach (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03699984

DOI: 10.1007/s10479-020-03817-z

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