Data Envelopment Analysis (DEA): New Approach to Measure Financial Efficiency of Banks

Authors

  • Sneha R

Keywords:

BusinessIntelligence,Publicsectorbanks,Oldgenerationprivate sector banks, New generation private sector banks, Data EnvelopmentAnalysis,Malmquist Productivity Index.

Abstract

Data Envelopment Analysis (DEA) is a popular non-parametric test approachused to measure the production frontiers of financial institutions such as Banks. DEAmeasuresthe optimal combinationofinputs thathelp firms realisehigherreturns.Understanding the relative efficiency and performance of banks compared tothe market over a period of time is extremely important for analysts, practitioners, andpolicymakersalike.

Inthepresentcase,DEA isemployedtomeasurethefinancialefficiencyofthebanks, referred to as Decision Making Units (DMUs), and to understand how theseDMUsemploytheirinputstogainoptimaloutputs.Thebankperformanceisquantifiedinter msoftheirproductivityorefficiencywhichisgivenbytheratioofthetotaloutputsto total inputs.

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Published

2020-04-30

How to Cite

Sneha R. (2020). Data Envelopment Analysis (DEA): New Approach to Measure Financial Efficiency of Banks. The Journal of Contemporary Issues in Business and Government, 26(1), 300–311. Retrieved from https://cibgp.com/au/index.php/1323-6903/article/view/225

Issue

Vol. 26 No. 1 (2020): The journal of contemporary issues in business and government

Section

Articles

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