Comparative efficiency analysis of Portuguese bank branches

Maria Conceição A.Silva Portela*, Emmanuel Thanassoulis

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

82 Citations (Scopus)
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Abstract

The advent of Internet banking and phone banking is changing the role of bank branches from a predominantly transaction-based one to a sales-oriented role. This paper reports on an assessment of the branches of a Portuguese bank in terms of their performance in their new roles in three different areas: Their efficiency in fostering the use of new transaction channels, their efficiency in increasing sales and their customer base, and their efficiency in generating profits. Service quality is also a major issue in service organisations like bank branches, and therefore we analyse the way this dimension of performance has been accounted for in the literature and take it into account in our empirical application. We have used data envelopment analysis (DEA) for the different performance assessments, but we depart from traditional DEA models in some cases. Performance comparisons on each dimension allowed us to identify benchmark bank branches and also problematic bank branches. In addition, we found positive links between operational and profit efficiency and also between transactional and operational efficiency. Service quality is positively related with operational and profit efficiency.

Original languageEnglish
Pages (from-to)1275-1288
Number of pages14
JournalEuropean Journal of Operational Research
Volume177
Issue number2
DOIs
Publication statusPublished - 1 Mar 2007

Keywords

  • Banking
  • Efficiency
  • Profitability
  • Service quality

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