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Efficiency Comparison of Operational and Profitability: A Case of Hong Kong Commercial Banks

Author(s): Cheng-Ru Wu | Hui-Yin Tsai | Ya-Mei Wang

Journal: Journal of Social Sciences
ISSN 1549-3652

Volume: 4;
Issue: 4;
Start page: 280;
Date: 2008;
Original page

Keywords: Date envelopment analysis | stock exchange | Over The Counter (OTC) | two-stage | operational efficiency | profitability efficiency

Problem Statement: Traditional DEA models deal with measurements of relative efficiency of DMUs regarding multiple-inputs vs. multiple-outputs. One of the drawbacks of these models is the neglect of intermediate products or linking activities. The objectives of this study were: (i) This research was shown how to use DEA by two stages, with outputs from the first stage becoming inputs in the second stage. (ii) Comparative analysis of efficiency of bank manageable in Hong Kong. Approach: The research conducts a comparative analysis of efficiency of bank manageable in Hong Kong using a two-stage model, which evaluates their Operational Efficiency (OE) and Profitability Efficiency (PE). The study period covered 2004-2006 and used two-stage Data Envelopment Analysis (DEA). Results: Large-sized banks are generally more efficient than small-sized ones in the operational efficiency; while small efficient banks are easily to become benchmarks, large efficient banks are deemed as competitive niche players. This means that the large banks have better competitive power than those of smaller ones. Conclusion: Using this model, we can evaluate divisional efficiencies along with the overall efficiency of decision making units (DMUs).
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