AN EMPIRICAL STUDY ON ANALYZING THE PRODUCTIVITY OF BANK BRANCHES

Abstract

Productivity analysis and its strategic implications are not only important for manufacturing sector but equally essential for other sectors as well. Branch banking sector is no exception in this sense and banks have to operate more efficiently and effectively in an increasingly competitive environment to sustain or improve their relative positions. This paper discusses the methodology of an empirical study that was employed in analyzing the operating productivities of a set of 44 bank branches of a major commercial bank offering relatively homogeneous products in a multi-market business environment. The methodology was based on the concepts and principles of Data Envelopment Analysis (DEA). The results of the study have indicated that this kind of productivity analysis is not only complementary to traditionally used financial ratios but also is a useful bank management tool in reallocating resources between the branches in order to achieve higher efficiencies.