Comparative efficiency analysis of Portuguese bank branches

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. © 2006 Elsevier B.V. All rights reserved.

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.

Malmquist indexes using a geometric distance function (GDF):application to a sample of Portuguese bank branches

Traditional approaches to calculate total factor productivity (TFP) change through Malmquist indexes rely on distance functions. In this paper we show that the use of distance functions as a means to calculate TFP change may introduce some bias in the analysis, and therefore we propose a procedure that calculates TFP change through observed values only. Our total TFP change is then decomposed into efficiency change, technological change, and a residual effect. This decomposition makes use of a non-oriented measure in order to avoid problems associated with the traditional use of radial oriented measures, especially when variable returns to scale technologies are to be compared. The proposed approach is applied in this paper to a sample of Portuguese bank branches.

How leadership and commitment influence bank employees' adoption of their bank's values

Retail banking is facing many challenges, not least the loss of its customers' trust and loyalty. The economic crisis is forcing banks to examine their relationships with stakeholders and to offer greater reassurance that their brand promises will be delivered. More than ever, banks need to stand for something positive and valued by stakeholders. One way to achieve this is through paying more attention to brand values. Our article explores how values are adopted by employees within a bank. When employees 'live' their brand's values, their behaviour during customer interactions reflects this, encouraging the strengthening of customer relationships. Specifically, we test the relationship between leadership style, employee commitment, and the adoption of values. Data was collected from a survey of 438 branch employees in a leading Irish retail bank. The study found that a structured and directive leadership style was effective at encouraging the adoption of the bank's values. Moreover, when employees are committed to the organisation, this has a significant impact on their adoption of values. Thus, this study supports the literature which suggests that leadership and commitment are prerequisites for values adoption. © 2011 Springer Science+Business Media B.V.

Finding closest targets in non-oriented DEA models:the case of convex and non-convex technologies

This paper draws attention for the fact that traditional Data Envelopment Analysis (DEA) models do not provide the closest possible targets (or peers) to inefficient units, and presents a procedure to obtain such targets. It focuses on non-oriented efficiency measures (which assume that production units are able to control, and thus change, inputs and outputs simultaneously) both measured in relation to a Free Disposal Hull (FDH) technology and in relation to a convex technology. The approaches developed for finding close targets are applied to a sample of Portuguese bank branches.

Adopting the experiential values propositions as e-atmospherics:an illustration through the case of e-banking

For a couple of years now, the Columbia Business School and in particular Bernd Schmitt have been advocating for more work to be done regarding 'experiential marketing'. Taking the case of e-atmospherics in Turkish e-banking practices, we revisit the theory of strategic experiential modules which are sense, feel, think, act and relate. Two major ebanking experience providers' types of communication, product design, retail presence and epresence have been unpacked. These are Garanti Bank, who's known with its many award winning web site, and Akbank who has a standard web site. The Turkish banking at the border of the EU and under global influences has expended and liberalized dramatically over the last decade making the most of new technologies, hence offering an interesting perspective in a non-homogenous society where the technological divide remains important. First a qualitative content analysis of both bank's homepages is conducted. This is followed by 43 online surveys, where 18 is Garanti Bank consumer, 19 is Akbank consumer and 6 is both Garanti and Akbank consumer, to explore how e-atmospherics experiential features currently recognized by users. Our findings indicate that experiential marketing in e-banking can be expected to be the key to greater online migration of consumers and differentiation among the players. Yet, while the first two steps sense and feel are explicitly developed by both players, act and relate still remain poor. Moreover, 'think' is discovered to be a key moderator where both banks seem to lack clear strategy.

A mean field theory of coded CDMA systems

We present a mean field theory of code-division multiple access (CDMA) systems with error-control coding. On the basis of the relation between the free energy and mutual information, we obtain an analytical expression of the maximum spectral efficiency of the coded CDMA system, from which a mean field description of the coded CDMA system is provided in terms of a bank of scalar Gaussian channels whose variances in general vary at different code symbol positions. Regular low-density parity-check (LDPC)-coded CDMA systems are also discussed as an example of the coded CDMA systems.

An exploratory study of management accounting and control systems in a developing country

This thesis reports on the results of case studies in four commercial banks in Nigeria. The study focuses how management accounting and control systems (MCS) operate in the four banks. The study is motivated by the dearth of literature on management accounting practices in the developing world in general and in Nigeria in specific. The case study approach adopted in conducting the research was useful in exploring the dynamics of the MCS in the organisations. Data was gathered from two sources. First, semi-structured interviews were conducted with managers at the head office, regional office and branches of each bank. The participants were selected from different backgrounds and managerial levels to provide broader understanding of the operations of the MCS. Second, various internal and external documents were reviewed to provide supporting evidence for the interview results. New institutional sociology (NIS) provided the theoretical framework to understand the results. NIS provided explanations for how the MCS in the four banks were shaped by diverse external and internal factors. The key factors identified as shaping the operations of the MCS were the need to comply with the regulatory environment (coercive isomorphism), the need to maintain social and cultural support (normative isomorphism) and the need to imitate successful organisations in order to appear legitimate (mimetic isomorphism). The study also examines the interplay between the institutional forces, market forces and infra-organisational power relations. This analysis is necessary to overcome the criticism of NIS that it downplays the role of market forces, agency and intra-organisational relations. The findings of the study have implications for understanding the operations of MCS in the developing world.

New insights on measuring bank branches efficiency through DEA:transactional, operational, and profit assessments

This thesis presents a number of methodological developments that were raised by a real life application to measuring the efficiency of bank branches. 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 fact requires the development of new forms of assessing and comparing branches of a bank. In addition, performance assessment models must also take into account the fact that bank branches are service and for-profit organisations to which providing adequate service quality as well as being profitable are crucial objectives. This study analyses bank branches performance in their new roles in three different areas: their effectiveness in fostering the use of new transaction channels such as the internet and the telephone (transactional efficiency); their effectiveness in increasing sales and their customer base (operational efficiency); and their effectiveness in generating profits without compromising the quality of service (profit efficiency). The chosen methodology for the overall analysis is Data Envelopment Analysis (DEA). The application attempted here required some adaptations to existing DEA models and indeed some new models so that some specialities of our data could be handled. These concern the development of models that can account for negative data, the development of models to measure profit efficiency, and the development of models that yield production units with targets that are nearer to their observed levels than targets yielded by traditional DEA models. The application of the developed models to a sample of Portuguese bank branches allowed their classification according to the three performance dimensions (transactional, operational and profit efficiency). It also provided useful insights to bank managers regarding how bank branches compare between themselves in terms of their performance, and how, in general, the three performance dimensions are connected between themselves.

Does the World Bank have any impact on human development in the poorest countries? Some preliminary evidence from Africa

In an attempt to better understand the impact of the World Bank on human development in poor countries, we use cross-country data on African countries for the 1990–2002 period to examine this relationship. The coefficient estimates of our parsimonious fixed-effects models indicate that while loans and grants of the Bank have had a positive impact on some relatively short-term indicators of health and education in an average African country, there is little evidence to suggest that such loans and grants have helped these countries to consolidate on the short-term gains.

Changing employment relation systems in Japan:cases of the Mitsubishi Chemical Group and the Federation of Shinkin Banks

Over the past decade or so a number of changes have been observed in traditional Japanese employment relations (ERs) systems such as an increase in non-regular workers, a move towards performance-based systems and a continuous decline in union membership. There is a large body of Anglo-Saxon and Japanese literature providing evidence that national factors such as national institutions, national culture, and the business and economic environment have significantly influenced what were hitherto three ‘sacred’ aspects of Japanese ERs systems (ERSs). However, no research has been undertaken until now at the firm level regarding the extent to which changes in national factors influence ERSs across firms. This article develops a model to examine the impact of national factors on ER systems; and analyses the impact of national factors at the firm level ER systems. Based on information collected from two different groups of companies, namely Mitsubishi Chemical Group (MCG) and Federation of Shinkin Bank (FSB) the research finds that except for a few similarities, the impact of national factors is different on Japanese ER systems at the firm level. This indicates that the impact of national factors varies in the implementation of employment relations factors. In the case of MCG, national culture has less to do with seniority-based system. Study also reveals that the national culture factors have also less influence on an enterprise-based system in the case of FSB. This analysis is useful for domestic and international organizations as it helps to better understand the role of national factors in determining Japanese ERSs.

CEO power, government monitoring, and bank dividends

We investigate the role of CEO power and government monitoring on bank dividend policy for a sample of 109 European listed banks for the period 2005-2013. We employ three main proxies for CEO power: CEO ownership, CEO tenure, and unforced CEO turnover. We show that CEO power has a negative impact on dividend payout ratios and on performance, suggesting that entrenched CEOs do not have the incentive to increase payout ratios to discourage monitoring from minority shareholders. Stronger internal monitoring by board of directors, as proxied by larger ownership stakes of the board members, increases performance but decreases payout ratios. These findings are contrary to those from the entrenchment literature for non-financial firms. Government ownership and the presence of a government official on the board of directors of the bank, also reduces payout ratios, in line with the view that government is incentivized to favor the interest of bank creditors before the interest of minority shareholders. These results show that government regulators are mainly concerned about bank safety and this allows powerful CEOs to distribute low payouts at the expense of minority shareholders.

Human sensitivity to phase perturbations in natural images:A statistical framework

Fourier-phase information is important in determining the appearance of natural scenes, but the structure of natural-image phase spectra is highly complex and difficult to relate directly to human perceptual processes. This problem is addressed by extending previous investigations of human visual sensitivity to the randomisation and quantisation of Fourier phase in natural images. The salience of the image changes induced by these physical processes is shown to depend critically on the nature of the original phase spectrum of each image, and the processes of randomisation and quantisation are shown to be perceptually equivalent provided that they shift image phase components by the same average amount. These results are explained by assuming that the visual system is sensitive to those phase-domain image changes which also alter certain global higher-order image statistics. This assumption may be used to place constraints on the likely nature of cortical processing: mechanisms which correlate the outputs of a bank of relative-phase-sensitive units are found to be consistent with the patterns of sensitivity reported here.

A new inverse DEA method for merging banks

This study suggests a novel application of Inverse Data Envelopment Analysis (InvDEA) in strategic decision making about mergers and acquisitions in banking. The conventional DEA assesses the efficiency of banks based on the information gathered about the quantities of inputs used to realize the observed level of outputs produced. The decision maker of a banking unit willing to merge/acquire another banking unit needs to decide about the inputs and/or outputs level if an efficiency target for the new banking unit is set. In this paper, a new InvDEA-based approach is developed to suggest the required level of the inputs and outputs for the merged bank to reach a predetermined efficiency target. This study illustrates the novelty of the proposed approach through the case of a bank considering merging with or acquiring one of its competitors to synergize and realize higher level of efficiency. A real data set of 42 banking units in Gulf Corporation Council countries is used to show the practicality of the proposed approach.