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Are Sustainable Banks Efficient and Productive? A Data Envelopment Analysis and the Malmquist Productivity Index Analysis

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  • Akber Aman Shah

    (School of Economics and Management, University of Chinese Academy of Science, Beijing 100049, China)

  • Desheng Wu

    (School of Economics and Management, University of Chinese Academy of Science, Beijing 100049, China
    Stockholm Business School, Stockholm University, SE-10691 Stockholm, Sweden)

  • Vladmir Korotkov

    (School of Economics and Management, University of Chinese Academy of Science, Beijing 100049, China)

Abstract

Corporate sustainability is the integration of environmental protection, financial benefit, and social responsibility into management and business operations. There is insufficient evidence for its relationship with operating performance and productivity. Furthermore, it becomes doubtful when investors standardize corporate sustainable strategies. This study evaluates the performance and productivity of sustainable banks, exploring practical issues by providing supporting evidence. A two-stage performance evaluation is employed with the integration of data envelopment analysis (DEA) and Malmquist productivity index (MPI) to evaluate sustainable bank performance and productivity for 9 years (2010–2018) in comparison with non-sustainable banks. DEA is used to define dynamic benchmarking, and MPI builds on time-series analysis. The results of our study reveal that sustainable banks are more efficient and productive. The productivity of sustainable banks and non-sustainable banks was influenced by external and internal factors, respectively.

Suggested Citation

  • Akber Aman Shah & Desheng Wu & Vladmir Korotkov, 2019. "Are Sustainable Banks Efficient and Productive? A Data Envelopment Analysis and the Malmquist Productivity Index Analysis," Sustainability, MDPI, vol. 11(8), pages 1-19, April.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:8:p:2398-:d:225088
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    2. Maria Celia López-Penabad & Ana Iglesias-Casal & José Fernando Silva Neto & José Manuel Maside-Sanfiz, 2023. "Does corporate social performance improve bank efficiency? Evidence from European banks," Review of Managerial Science, Springer, vol. 17(4), pages 1399-1437, May.
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    4. Mario La Torre & Lucilla Bittucci & Cosimo Paccione & Alessia Palma, 2024. "Evaluating the sustainability profile of banks: A comprehensive benchmarking analysis in the Italian context," Business Strategy and the Environment, Wiley Blackwell, vol. 33(4), pages 3654-3668, May.
    5. Cândida Ferreira, 2020. "Evaluating European Bank Efficiency Using Data Envelopment Analysis: Evidence in the Aftermath of the Recent Financial Crisis," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 26(4), pages 391-405, November.
    6. Wasi Ul Hassan Shah & Gang Hao & Nan Zhu & Rizwana Yasmeen & Ihtsham Ul Haq Padda & Muhammad Abdul Kamal, 2022. "A cross-country efficiency and productivity evaluation of commercial banks in South Asia: A meta-frontier and Malmquist productivity index approach," PLOS ONE, Public Library of Science, vol. 17(4), pages 1-17, April.
    7. Jian Xue & Di Zhu & Laijun Zhao & Chenchen Wang & Hongyang Li, 2019. "Redundancy Identification and Optimization Scheme of Branches for Sustainable Operation of Commercial Banks," Sustainability, MDPI, vol. 11(15), pages 1-19, July.
    8. Markus Riegler, 2023. "Towards a definition of sustainable banking - a consolidated approach in the context of guidelines and strategies," International Journal of Corporate Social Responsibility, Springer, vol. 8(1), pages 1-26, December.
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    10. Halit Gonenc & Bert Scholtens, 2019. "Responsibility and Performance Relationship in the Banking Industry," Sustainability, MDPI, vol. 11(12), pages 1-49, June.
    11. Jasman Tuyon & Okey Peter Onyia & Aidi Ahmi & Chia-Hsing Huang, 2023. "Sustainable financial services: reflection and future perspectives," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 28(4), pages 664-690, December.
    12. Zon-Yau Lee & Mei-Tai Chu & Yu-Ting Wang & Kuan-Ju Chen, 2020. "Industry Performance Appraisal Using Improved MCDM for Next Generation of Taiwan," Sustainability, MDPI, vol. 12(13), pages 1-18, June.
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