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Modelling bank performance: a network DEA approach

Fukuyama, Hirofumi; Matousek, Roman

Authors

Hirofumi Fukuyama

Roman Matousek



Abstract

In this paper, we develop a bank network revenue function to evaluate banks’ network revenue performance. The bank network revenue function, which extends the environmental revenue function and the two-stage network cost function, is constructed as the difference between total revenue and the reserves for possible loan losses to incorporate the roles played by non-performing loans in bank production. The second part of the paper then applies Nerlove's revenue inefficiency model. We consider revenue maximization in two stages. We apply this function to Japanese banks operating from September 2000 to March 2013.

Journal Article Type Article
Acceptance Date Oct 23, 2016
Online Publication Date Oct 28, 2016
Publication Date Jun 1, 2017
Deposit Date May 8, 2018
Publicly Available Date Oct 29, 2018
Journal European Journal of Operational Research
Print ISSN 0377-2217
Electronic ISSN 0377-2217
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 259
Issue 2
DOI https://doi.org/10.1016/j.ejor.2016.10.044
Keywords Data Envelopment Analysis; Bank revenue function; Japanese banks; Non-performing loans; Two stage network DEA
Public URL https://nottingham-repository.worktribe.com/output/862958
Publisher URL https://www.sciencedirect.com/science/article/pii/S0377221716308785?via%3Dihub

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