IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i21p14165-d958156.html
   My bibliography  Save this article

Operational Efficiency Evaluation of Chinese Internet Banks: Two-Stage Network DEA Approach

Author

Listed:
  • Min Li

    (School of Civil Engineering, Hubei Engineering University, Xiaogan 432000, China)

  • Nan Zhu

    (Western Business School, Southwestern University of Finance and Economics, Chengdu 611130, China)

  • Kai He

    (School of Management Science and Engineering, Southwestern University of Finance and Economics, Chengdu 611130, China)

  • Minghui Li

    (School of Business, Wuhan Huaxia Institute of Technology, Wuhan 430223, China)

Abstract

An in-depth study of the operational efficiency of Internet banks is essential to enhance banks’ competitiveness and sustainable development. We use the two-stage network data envelopment analysis (DEA) model to divide the operational process of Internet banks into the value operation stage (stage 1) and the value creation stage (stage 2). This paper adopts the R&D investment that reflects the characteristics of Internet banks as the input of the value operation stage in the two-stage DEA model. It examines the operating efficiency of China’s Internet banks from 2018 to 2019, including stage efficiency and comprehensive efficiency. The empirical analysis results indicate that the contribution of stage 2 to the comprehensive efficiency is higher than that of stage 1. Similarly, it can also be shown that the average values of the stage efficiency and comprehensive efficiency of Internet banking in 2019 are higher than those in 2018. In addition, the Kruskal–Wallis test shows no significant difference in the average comprehensive efficiency of Internet banks in the three major economic belts. These results have significant strategic implications for managers, regulators, and policymakers who share a common interest in boosting financial sustainability and performance.

Suggested Citation

  • Min Li & Nan Zhu & Kai He & Minghui Li, 2022. "Operational Efficiency Evaluation of Chinese Internet Banks: Two-Stage Network DEA Approach," Sustainability, MDPI, vol. 14(21), pages 1-18, October.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:21:p:14165-:d:958156
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/21/14165/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/21/14165/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kaiyang Zhong & Chenglin Li & Qing Wang, 2021. "Evaluation of Bank Innovation Efficiency with Data Envelopment Analysis: From the Perspective of Uncovering the Black Box between Input and Output," Mathematics, MDPI, vol. 9(24), pages 1-18, December.
    2. Sajida Sari & Shochrul Rohmatul Ajija & Wasiaturrahma Wasiaturrahma & Raja Adzrin Raja Ahmad, 2022. "The Efficiency of Indonesian Commercial Banks: Does the Banking Industry Competition Matter?," Sustainability, MDPI, vol. 14(17), pages 1-16, September.
    3. Zhikang Xie & Xinglin Liu & Hina Najam & Qinghua Fu & Jawad Abbas & Ubaldo Comite & Laura Mariana Cismas & Andra Miculescu, 2022. "Achieving Financial Sustainability through Revenue Diversification: A Green Pathway for Financial Institutions in Asia," Sustainability, MDPI, vol. 14(6), pages 1-16, March.
    4. Chen, Yao & Cook, Wade D. & Li, Ning & Zhu, Joe, 2009. "Additive efficiency decomposition in two-stage DEA," European Journal of Operational Research, Elsevier, vol. 196(3), pages 1170-1176, August.
    5. Kai Zhang & Xinmiao Zhou, 2022. "Is Promoting Green Finance in Line with the Long-Term Market Mechanism? The Perspective of Chinese Commercial Banks," Mathematics, MDPI, vol. 10(9), pages 1-26, April.
    6. Fukuyama, Hirofumi & Matousek, Roman & Tzeremes, Nickolaos G., 2020. "A Nerlovian cost inefficiency two-stage DEA model for modeling banks’ production process: Evidence from the Turkish banking system," Omega, Elsevier, vol. 95(C).
    7. Haitao Li & Jie Xiong & Jianhui Xie & Zhongbao Zhou & Jinlong Zhang, 2019. "A Unified Approach to Efficiency Decomposition for a Two-Stage Network DEA Model with Application of Performance Evaluation in Banks and Sustainable Product Design," Sustainability, MDPI, vol. 11(16), pages 1-18, August.
    8. Nada Milenković & Boris Radovanov & Branimir Kalaš & Aleksandra Marcikić Horvat, 2022. "External Two Stage DEA Analysis of Bank Efficiency in West Balkan Countries," Sustainability, MDPI, vol. 14(2), pages 1-16, January.
    9. Lawrence M. Seiford & Joe Zhu, 1999. "Profitability and Marketability of the Top 55 U.S. Commercial Banks," Management Science, INFORMS, vol. 45(9), pages 1270-1288, September.
    10. Xie, Qiwei & Xu, Qifan & Chen, Lifan & Jin, Xi & Li, Siqi & Li, Yongjun, 2022. "Efficiency evaluation of China's listed commercial banks based on a multi-period leader-follower model," Omega, Elsevier, vol. 110(C).
    11. Kao, Chiang & Hwang, Shiuh-Nan, 2011. "Decomposition of technical and scale efficiencies in two-stage production systems," European Journal of Operational Research, Elsevier, vol. 211(3), pages 515-519, June.
    12. Kao, Chiang & Hwang, Shiuh-Nan, 2008. "Efficiency decomposition in two-stage data envelopment analysis: An application to non-life insurance companies in Taiwan," European Journal of Operational Research, Elsevier, vol. 185(1), pages 418-429, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. An, Qingxian & Chen, Haoxun & Xiong, Beibei & Wu, Jie & Liang, Liang, 2017. "Target intermediate products setting in a two-stage system with fairness concern," Omega, Elsevier, vol. 73(C), pages 49-59.
    2. Kao, Chiang, 2014. "Network data envelopment analysis: A review," European Journal of Operational Research, Elsevier, vol. 239(1), pages 1-16.
    3. Despotis, Dimitrs & Koronakos, Gregory & Sotiros, Dimitris, 2012. "Additive decomposition in two-stage DEA: An alternative approach," MPRA Paper 41724, University Library of Munich, Germany.
    4. Lim, Dong-Joon & Kim, Moon-Su, 2022. "Measuring dynamic efficiency with variable time lag effects," Omega, Elsevier, vol. 108(C).
    5. Li, Yongjun & Liu, Jin & Ang, Sheng & Yang, Feng, 2021. "Performance evaluation of two-stage network structures with fixed-sum outputs: An application to the 2018winter Olympic Games," Omega, Elsevier, vol. 102(C).
    6. Sahoo, Biresh K. & Zhu, Joe & Tone, Kaoru & Klemen, Bernhard M., 2014. "Decomposing technical efficiency and scale elasticity in two-stage network DEA," European Journal of Operational Research, Elsevier, vol. 233(3), pages 584-594.
    7. Bao-Ngoc Tong & Cheng-Ping Cheng & Lien-Wen Liang & Yi-Jun Liu, 2023. "Using Network DEA to Explore the Effect of Mobile Payment on Taiwanese Bank Efficiency," Sustainability, MDPI, vol. 15(8), pages 1-18, April.
    8. Ang, Sheng & Liu, Pei & Yang, Feng, 2020. "Intra-Organizational and inter-organizational resource allocation in two-stage network systems," Omega, Elsevier, vol. 91(C).
    9. Li, Yongjun & Lei, Xiyang & Dai, Qianzhi & Liang, Liang, 2015. "Performance evaluation of participating nations at the 2012 London Summer Olympics by a two-stage data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 243(3), pages 964-973.
    10. Xianmei Wang & Hanhui Hu, 2017. "Sustainability in Chinese Higher Educational Institutions’ Social Science Research: A Performance Interface toward Efficiency," Sustainability, MDPI, vol. 9(11), pages 1-18, October.
    11. Lu, Wen-Min & Liu, John S. & Kweh, Qian Long & Wang, Chung-Wei, 2016. "Exploring the benchmarks of the Taiwanese investment trust corporations: Management and investment efficiency perspectives," European Journal of Operational Research, Elsevier, vol. 248(2), pages 607-618.
    12. Adel Hatami-Marbini & Saber Saati & Seyed Mojtaba Sajadi, 2018. "Efficiency analysis in two-stage structures using fuzzy data envelopment analysis," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 26(4), pages 909-932, December.
    13. Fukuyama, Hirofumi & Weber, William L., 2010. "A slacks-based inefficiency measure for a two-stage system with bad outputs," Omega, Elsevier, vol. 38(5), pages 398-409, October.
    14. Despotis, Dimitris K. & Koronakos, Gregory & Sotiros, Dimitris, 2016. "The “weak-link” approach to network DEA for two-stage processes," European Journal of Operational Research, Elsevier, vol. 254(2), pages 481-492.
    15. Hsiao-Yen Mao & Wen-Min Lu & Hsin-Yen Shieh, 2023. "Exploring the Influence of Environmental Investment on Multinational Enterprises’ Performance from the Sustainability and Marketability Efficiency Perspectives," Sustainability, MDPI, vol. 15(10), pages 1-23, May.
    16. Georgios Tsaples & Jason Papathanasiou & Andreas C. Georgiou, 2022. "An Exploratory DEA and Machine Learning Framework for the Evaluation and Analysis of Sustainability Composite Indicators in the EU," Mathematics, MDPI, vol. 10(13), pages 1-27, June.
    17. Huang, Tai-Hsin & Chen, Kuan-Chen & Lin, Chung-I, 2018. "An extension from network DEA to copula-based network SFA: Evidence from the U.S. commercial banks in 2009," The Quarterly Review of Economics and Finance, Elsevier, vol. 67(C), pages 51-62.
    18. Halkos, George & Tzeremes, Nickolaos & Kourtzidis, Stavros, 2014. "Measuring the efficiency of banking systems: A relational two-stage window DEA approach," MPRA Paper 55671, University Library of Munich, Germany.
    19. Kao, Chiang, 2017. "Efficiency measurement and frontier projection identification for general two-stage systems in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 261(2), pages 679-689.
    20. Lozano, Sebastián, 2016. "Slacks-based inefficiency approach for general networks with bad outputs: An application to the banking sector," Omega, Elsevier, vol. 60(C), pages 73-84.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:14:y:2022:i:21:p:14165-:d:958156. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.