Profitability of a sample of Portuguese bank branches and its decomposition into technical and allocative components


The efficiency literature, both using parametric and non-parametric methods, has been focusing mainly on cost efficiency analysis rather than on profit efficiency. In for-profit organisations, however, the measurement of profit efficiency and its decomposition into technical and allocative efficiency is particularly relevant. In this paper a newly developed method is used to measure profit efficiency and to identify the sources of any shortfall in profitability (technical and/or allocative inefficiency). The method is applied to a set of Portuguese bank branches first assuming long run and then a short run profit maximisation objective. In the long run most of the scope for profit improvement of bank branches is by becoming more allocatively efficient. In the short run most of profit gain can be realised through higher technical efficiency. © 2003 Elsevier B.V. All rights reserved.

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Divisions: College of Business and Social Sciences > Aston Business School > Operations & Information Management
Uncontrolled Keywords: bank branches,sata envelopment analysis,profit efficiency,Information Systems and Management,Management Science and Operations Research,Statistics, Probability and Uncertainty,Applied Mathematics,Modelling and Simulation,Transportation
Publication ISSN: 1872-6860
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Related URLs: http://www.scop ... tnerID=8YFLogxK (Scopus URL)
Published Date: 2005-05-01
Authors: Silva Portela, Maria C.A.
Thanassoulis, Emmanuel (ORCID Profile 0000-0002-3769-5374)


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