Efficiency Analysis Of Commercial Bank Branches Based On DEA Model

Finance is a scarce resource of society and the efficiency of financial activities isinevitably a major topic of financial studies. In a financial system dominated byindirect financing, the efficiency of commercial banks determines the allocation offinancial resources in the whole society and even influences the economic growth ofour country. Increased efficiency of commercial banks is a strong support to ournation’s stable economic development. Efficiency of a commercial bank refers to theinput/output ratio of the bank’s businesses and reflects how well the bank convertsfinancial recourses to various financial products. An efficiency calculation andanalysis of a commercial bank can shed light on possible underutilization occurredduring resource allocation and room for output improvement. The Management willhave a better understanding of its operation shortcomings in contrast to other banks’competitive advantage, and improve its management accordingly. Branches andsub-branches of commercial banks are hands-on executives of policies anddistributors of financial resources. The way branches and sub-branches handle andsupervise resource application will have a direct impact on not only their ownefficiency but also the whole performance of the commercial banks.This essay analyzes an commercial bank and its outlets with DEA, compares thetrend observed in overall technical efficiency, pure technical efficiency and scaleefficiency, conducts regression analysis on the efficiency and likely acting factors ofoutlets in various cities, and finally suggests that internally an all-round performancereview system be established, technological innovation be encouraged, talents bevigorously introduced in and resources be reasonably allocated; externally branches orsub-branches in pipeline be located in key areas with robust economy and big marketpotential; etc.