Efficiency Analysis of Selected Banks Using DEA Models

Wenmeng Hu

Master's thesis

Anotácia:

The task of the paper is to estimate the efficient situation of banks by DEA model. We choose 21 banks in China and U.S.A. as the sample to study their efficiency. Firstly,we analyze the financial situation of the selected banks by introducing the macro environment and their financial ratios. Secondly, we apply the CCR model and SBM model respectively and have a comparison between them. And then, we extend SBM model to investigate the selected banks' sensitivities to each item of input and output. The last part can be regarded as the analysis of reasons why these banks are efficient or not. We choose number of employees, operating expenses and total assets as input items; new added deposits, new added loans, net operating profit and ROE as outputs to analyze banks’ performance. Chinese banks were found a better performances and efficient situations than U.S. banks both in CCR and SBM application. , while Chinese banks lacks of independence and the ability to take risks. The excesses of number of employees and shortage of ROE are main deficiencies of them. Among U.S. banks, BAC has the lowest efficient situation. Technical inefficiency is the main reason of it. The ROE problem is the main shackles to U.S. banks. The paper also provides some useful advice to each inefficient banks about improving their efficiency.

Abstract:

The task of the paper is to estimate the efficient situation of banks by DEA model. We choose 21 banks in China and U.S.A. as the sample to study their efficiency. Firstly,we analyze the financial situation of the selected banks by introducing the macro environment and their financial ratios. Secondly, we apply the CCR model and SBM model respectively and have a comparison between them. And then, we extend SBM model to investigate the selected banks' sensitivities to each item of input and output. The last part can be regarded as the analysis of reasons why these banks are efficient or not. We choose number of employees, operating expenses and total assets as input items; new added deposits, new added loans, net operating profit and ROE as outputs to analyze banks’ performance. Chinese banks were found a better performances and efficient situations than U.S. banks both in CCR and SBM application. , while Chinese banks lacks of independence and the ability to take risks. The excesses of number of employees and shortage of ROE are main deficiencies of them. Among U.S. banks, BAC has the lowest efficient situation. Technical inefficiency is the main reason of it. The ROE problem is the main shackles to U.S. banks. The paper also provides some useful advice to each inefficient banks about improving their efficiency.

Kľúčové slová

bank efficiency, banks in China&U.S.A., financial analysis, data envelopment analysis, CCR model, SBM model, extended SBM model

Keywords

bank efficiency, banks in China&U.S.A., financial analysis, data envelopment analysis, CCR model, SBM model, extended SBM model

Jazyk práce: English

Datum vytvoření / odevzdání či podání práce: 25. 4. 2015

Obhajoba závěrečné práce

• Obhajoba proběhla 27. 5. 2015
• Vedúci: Tomáš Tichý
• Oponent: Michaela Staníčková

VŠB - Technical University of Ostrava

Ekonomická fakulta

Master programme / odbor:
Hospodářská politika a správa / Finance