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<p>The banking sector is characterised by complex production processes involving multiple inputs and outputs, which makes efficiency evaluation challenging. Banks play a central role in the economy by facilitating financial intermediation, supporting economic development, and providing financial services to households and firms. Consequently, the efficiency of banking institutions is of interest not only to bank management but also to regulators, investors, and the general public. In recent years, these issues have gained further importance due to structural changes in the banking industry, problems and failures at some major banks, increasing digitalisation, and the gradual transformation of the role of traditional bank branches. This paper evaluates the efficiency of a bank branch network operating in the Czech banking market using data envelopment analysis (DEA). The analysis is conducted at the branch level, reflecting the growing importance of branch efficiency for cost control, service provision, and customer interaction. Three complementary perspectives on efficiency are considered: production efficiency, profit efficiency, and transactional efficiency, the latter capturing the ongoing shift of banking activities toward digital and alternative service channels. The study examines a dataset of 393 bank branches observed over the period 2019–2021. Several DEA models are applied and adapted to the specific characteristics of banking operations, including Tone’s slacks-based measure model and models with desirable inputs, non-controllable outputs, and undesirable variables. Transactional efficiency is assessed using an output-oriented BCC model, while production and profit efficiency are evaluated using non-oriented SBMT models with variable returns to scale. The results indicate that the branch network operates close to the efficient frontier in terms of transactional efficiency, suggesting limited potential for further improvement in shifting transactions to alternative channels. In contrast, substantial inefficiencies are identified in production and profit efficiency, with average production efficiency around 0.6 and profit efficiency around 0.8. A statistically significant positive relationship between production and profit efficiency is observed, while both show a weak negative correlation with customer satisfaction. The analysis further identifies personnel costs as the primary source of profit inefficiency and insufficient volumes of banking products as the main driver of production inefficiency. The findings demonstrate the usefulness of combining multiple DEA models to obtain a comprehensive assessment of bank branch performance and provide actionable insights for branch-level management and strategic decision-making.</p>

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Comprehensive efficiency evaluation of bank branches using data envelopment analysis models

  • 期刊论文

  • 发表日期：

    2026年3月30日

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  • Jana Sekničková,
  • Karolína Dočekalová,
  • Martina Kuncová

摘要

The banking sector is characterised by complex production processes involving multiple inputs and outputs, which makes efficiency evaluation challenging. Banks play a central role in the economy by facilitating financial intermediation, supporting economic development, and providing financial services to households and firms. Consequently, the efficiency of banking institutions is of interest not only to bank management but also to regulators, investors, and the general public. In recent years, these issues have gained further importance due to structural changes in the banking industry, problems and failures at some major banks, increasing digitalisation, and the gradual transformation of the role of traditional bank branches. This paper evaluates the efficiency of a bank branch network operating in the Czech banking market using data envelopment analysis (DEA). The analysis is conducted at the branch level, reflecting the growing importance of branch efficiency for cost control, service provision, and customer interaction. Three complementary perspectives on efficiency are considered: production efficiency, profit efficiency, and transactional efficiency, the latter capturing the ongoing shift of banking activities toward digital and alternative service channels. The study examines a dataset of 393 bank branches observed over the period 2019–2021. Several DEA models are applied and adapted to the specific characteristics of banking operations, including Tone’s slacks-based measure model and models with desirable inputs, non-controllable outputs, and undesirable variables. Transactional efficiency is assessed using an output-oriented BCC model, while production and profit efficiency are evaluated using non-oriented SBMT models with variable returns to scale. The results indicate that the branch network operates close to the efficient frontier in terms of transactional efficiency, suggesting limited potential for further improvement in shifting transactions to alternative channels. In contrast, substantial inefficiencies are identified in production and profit efficiency, with average production efficiency around 0.6 and profit efficiency around 0.8. A statistically significant positive relationship between production and profit efficiency is observed, while both show a weak negative correlation with customer satisfaction. The analysis further identifies personnel costs as the primary source of profit inefficiency and insufficient volumes of banking products as the main driver of production inefficiency. The findings demonstrate the usefulness of combining multiple DEA models to obtain a comprehensive assessment of bank branch performance and provide actionable insights for branch-level management and strategic decision-making.