Operating and profit efficiencies of bank branches : an application of DEA | |
| Author | Napapan Meepadung |
| Call Number | AIT Diss. no.SM-10-01 |
| Subject(s) | Branch banks--Thailand Banks and banking--Customer services--Thailand |
| Note | A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in International Business |
| Publisher | Asian Institute of Technology |
| Series Statement | Dissertation ; no. SM-10-01 |
| Abstract | The objective of the study is to evaluate operating and profit efficiency at the Bangkok branches of a major bank in Thailand, using a two-stage Data Envelopment Analysis (DEA) Model. DEA is valued by researchers in banking efficiency studies because the model can not only measure the efficiency of the complete production process, but through the two-stage DEA approach, efficiency can be furth er broken down, and therefore fine- tuned, into sub-processes that can also be measured for efficiency (Kao & Hwang, 2008; Manandhar & Tang, 2002; and Soteriou & Zenios, 1999 ). The flexibility of the independent two-stage DEA approach allows researchers to identify the underlying factors contributing to inefficiency (Kao & Hwang, 2008) and guides managers to the specific areas that need to be improved to increase efficiency (Seiford and Zhu, 1999). The standard DEA model was employed at each stage of this study. In the first stage, all types of sales-related operations influenced bank branch operating efficiency, was assessed using the following inputs: labor; non-interest expenses; interest expenses; and internal customer-service quality. The first three variables were obtained directly from branches. Internal customer-service quality, however, was derived from a field survey. On the output side, eight variables were used to reflect the main operational objectives of bank branches (i.e., current account, savings account, time deposits account, loans, IT-based transactions, number of bancassurance policies, premium, and commission). In stage II, profit efficiency was measured by the extent to which a branch achieved income maximization. The eight outputs from the first stage became the inputs for the second stage, and were called intermediate measures in the two-stage DEA model. Unlike other studies that use internal customer-service quality as a proxy for external customer- service quality, this study adopted a more reliable and accurate measurement of external customer-service quality, by using a customer survey of external customer service quality as an additional input. Hence, there were, in total , nine input variables. Outputs in the second stage of this DEA analysis consisted of non- interest and interest incomes. Results indicated that overall efficiency at the branches was high, and varied depending on location. The survey results of internal customer-service quality and external customer- service quality revealed that IT was a major factor of branch service quality. Branches with high internal and external customer service quality are likely to be efficient at generating profits. IT-based transactions at the branch level have a significant impact on profit efficiency, and therefore have a significant role t o play in profit maximization. Improving bank branch technology without eroding internal and external customer service quality, also supports service delivery and can be a practical way to achieve greater efficiency, which in turn, contributes to the bank’s overall profitability |
| Year | 2010 |
| Corresponding Series Added Entry | Asian Institute of Technology. Dissertation ; no. SM-10-01 |
| Type | Dissertation |
| School | School of Management |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Master of Business Administration (MBA) (Publication code=SM) |
| Chairperson(s) | Tang, John C. S.;Tang, John C. S.; |
| Examination Committee(s) | Do Ba Khang ;Vatcharaporn Esichaikul; |
| Scholarship Donor(s) | Bank of Ayudhya Public Company Limited, Thailand; |
| Degree | Thesis (Ph.D.) - Asian Institute of Technology, 2010 |