Assessing the Quality of Commercial Bank Management Using DEA Modeling
Abstract
Despite the fact that the quality of bank management is a key indicator of the consistency of a financial institution, it is commonly ignored due to the lack of an objective assessment method. Aim. This study aims to assess the quality of commercial bank management based on a data-oriented approach. Methods. This study proposes a relatively new dataoriented approach for the assessment of bank management quality, i.e., Data Envelopment Analysis (DEA). Using this method, it is possible to calculate a scalar measure of the effectiveness or quality of management by multiple input-output transformations. Results. The study analyzes fifty of the largest Russian commercial banks in terms of net assets and net profit as of the 3rd quarter of 2015. The analysis shows significant differences in quality assessment between credit institutions. Moreover, the characteristics of banks with the highest and the lowest management quality ratings according to an input-oriented CCR model suggest that banks with higher quality management have optimal labor expenses per employee, which provides a high interest yield and a high number of open deposits. Thus, the DEA method, a form of nonparametric analysis, can be used as an additional tool for the assessment of a bank’s operation compared with other market players.
About the Authors
Tat’yana A. Pustovalova
St. Petersburg State University Graduate School of Management
Russian Federation
Russian Federation
Anastasiya V. Markova
St. Petersburg State University
Russian Federation
Russian Federation
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Review
For citations:
Pustovalova T.A., Markova A.V. Assessing the Quality of Commercial Bank Management Using DEA Modeling. Economics and Management. 2016;(4):39-47. (In Russ.)
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