Journal of Social Sciences

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

Cheng-Ru Wu, Hui-Yin Tsai and Ya-Mei Wang

DOI : 10.3844/jssp.2008.280.287

Journal of Social Sciences

Volume 4, Issue 4

Pages 280-287

Abstract

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).

Copyright

© 2008 Cheng-Ru Wu, Hui-Yin Tsai and Ya-Mei Wang. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.