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Managing Bank Productivity Using Data Envelopment Analysis (DEA)

Author

Listed:
  • H. David Sherman

    (Northeastern University, 404 Hayden Hall, Boston, Massachusetts 02115)

  • George Ladino

    (Citibank N.A., 153 East 53rd Street, New York, New York 10043)

Abstract

One bank used data envelopment analysis (DEA) to substantially improve its branch productivity and profits while maintaining service quality. It identified over $6 million of annual expense savings not identifiable with traditional financial and operating ratio analysis in its 33-branch system. A fairly new linear-programming-based benchmarking technique, DEA explicitly considers all the resources each branch uses and the services it provides. It compares branches objectively to identify the best-practice branches, the less productive branches, and the changes the less productive branches need to make to reach the best-practice level and to improve their profitability.

Suggested Citation

  • H. David Sherman & George Ladino, 1995. "Managing Bank Productivity Using Data Envelopment Analysis (DEA)," Interfaces, INFORMS, vol. 25(2), pages 60-73, April.
    • Handle: RePEc:inm:orinte:v:25:y:1995:i:2:p:60-73
    DOI: 10.1287/inte.25.2.60
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