Bank Performance Evaluation Based on a Modified Super-efficiency DEA Measure

Bank performance evaluation has been widely investigated as banks play a very important role in the financial system. The function of a bank is to efficiently channel funds to those who have the most productive investment opportunities, and to make profits as well. A bank's multiple objectives lead to complexity in its evaluation. As an approach for characterizing the relationships among multiple inputs and multiple outputs, DEA has been well used as a metric for measuring bank performance. However, there is an infeasibility problem associated with the traditional super-efficiency DEA models. Evaluation on bank performance is improved based on a modified super-efficiency DEA measure. The assessment of six banks in the Fortune Global 500 is used as an illustration example. Empirical results approve the subsequent efficiency change of banks due to the financial crisis.