Nontraditional activities and the efficiency of Taiwan commercial banks-Application of DEA

• Main Authors: Wang Yu-Pin, 王育品
• Other Authors: 陳家彬
• Format: Others
• Language: zh-TW
• Published: 2002
• Online Access: http://ndltd.ncl.edu.tw/handle/53039314892694121719

碩士 === 國立中興大學 === 企業管理學系研究所 === 90 === There have been many new commercial banks getting into Taiwan’s financial market since the deregulation in 1991. The keen competition causes the interest income slashed. In addition, more and more corporations raise funds by issuing bonds and commercial papers instead of borrowing from banks under financial liberalization. In the competitive environment, Taiwan’s banks started to get involved more in nontraditional activities in order to improve their profitability. This study focuses on the influence of nontraditional activities on evaluating bank efficiency. We apply the DEA method to measure performance of the banking industry. With the use of DEA, we select the input variables of capital, funds, and labor expenses and the output variables of loans, net investment, and noninterest income to analyze the efficiency with and without the inclusion of nontraditional income as an output item in the model. The major empirical results include： 1.The differences in efficiency scores between the models with and without nontraditional income are significant. This suggests that nontraditional activities should be included as we perform the evaluation of bank efficiency. 2.The source of the technical inefficiency mainly comes from scale inefficiency for all the banks. In addition, allocation efficiency is higher than technical efficiency, which indicates that the inefficiency results largely from technical factors. 3.There are no obvious differences in technical, pure technical, scale and allocation efficiency between new banks and old banks. However, there are significant variations in cost efficiency between the two sets of banks.