Benchmarking the efficiency of the Korean banking sector: a DEA approach
Purpose – The purpose of this paper is to critically examine the sources of inefficiency in the Korean banking sector. The present study focuses on three different approaches: intermediation approach, value-added approach, and operating approach, to differentiate how efficiency scores vary with ch...
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Emerald
2011
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| Online Access: | http://irep.iium.edu.my/5263/ http://irep.iium.edu.my/5263/ http://irep.iium.edu.my/5263/ http://irep.iium.edu.my/5263/1/Benchmarking.pdf |
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iium-52632012-02-27T07:17:21Z http://irep.iium.edu.my/5263/ Benchmarking the efficiency of the Korean banking sector: a DEA approach Sufian, Fadzlan HG1501 Banking Purpose – The purpose of this paper is to critically examine the sources of inefficiency in the Korean banking sector. The present study focuses on three different approaches: intermediation approach, value-added approach, and operating approach, to differentiate how efficiency scores vary with changes in inputs and outputs. Design/methodology/approach – The paper utilizes the non-parametric data envelopment analysis methodology to measure the efficiency of banks operating in the Korean banking sector. The method allows for the decomposition of technical efficiency (TE) into its mutually exhaustive components of pure technical and scale efficiencies. Findings – The empirical findings suggest that estimates of TE are consistently higher under an operating approach vis-a` -vis the intermediation and value-added approaches. On the other hand,banks are characterized by a relatively low level of TE under the intermediation approach. Research limitations/implications – Further analysis on the performance of the Korean banking sector performance will examine the efficiency changes over time by employing the parametric stochastic frontier analysis method. Investigations into productivity changes over time, as a result of a technical change or technological progress or regression by employing the Malmquist productivity index could yet be another extension to the paper. Practical implications – The findings from this study are essential not only for the managers of the banks, but for numerous stakeholders such as the central banks, bankers associations, governments,and other financial authorities. Knowledge of these factors would also be helpful to the regulatory authorities and bank managers who formulate going forward policies for improved efficiency of the Korean banking sector. Originality/value – Unlike the previous studies on the efficiency of the Korean banking sector,the paper focuses on three different approaches: intermediation approach, value-added approach,and operating approach to differentiate how efficiency scores vary with changes in inputs and outputs. Emerald 2011 Article PeerReviewed application/pdf en http://irep.iium.edu.my/5263/1/Benchmarking.pdf Sufian, Fadzlan (2011) Benchmarking the efficiency of the Korean banking sector: a DEA approach. Benchmarking: An International Journal, 18 (1). pp. 107-127. ISSN 1463-5771 http://www.emeraldinsight.com/journals.htm?issn=1463-5771 DOI 10.1108/14635771111109841 |
| repository_type |
Digital Repository |
| institution_category |
Local University |
| institution |
International Islamic University Malaysia |
| building |
IIUM Repository |
| collection |
Online Access |
| language |
English |
| topic |
HG1501 Banking |
| spellingShingle |
HG1501 Banking Sufian, Fadzlan Benchmarking the efficiency of the Korean banking sector: a DEA approach |
| description |
Purpose – The purpose of this paper is to critically examine the sources of inefficiency in the Korean
banking sector. The present study focuses on three different approaches: intermediation approach,
value-added approach, and operating approach, to differentiate how efficiency scores vary with changes
in inputs and outputs.
Design/methodology/approach – The paper utilizes the non-parametric data envelopment analysis methodology to measure the efficiency of banks operating in the Korean banking sector. The method allows for the decomposition of technical efficiency (TE) into its mutually exhaustive components of pure technical and scale efficiencies.
Findings – The empirical findings suggest that estimates of TE are consistently higher under an operating approach vis-a` -vis the intermediation and value-added approaches. On the other hand,banks are characterized by a relatively low level of TE under the intermediation approach.
Research limitations/implications – Further analysis on the performance of the Korean banking sector performance will examine the efficiency changes over time by employing the parametric stochastic frontier analysis method. Investigations into productivity changes over time, as a result of a technical change or technological progress or regression by employing the Malmquist productivity
index could yet be another extension to the paper.
Practical implications – The findings from this study are essential not only for the managers of the banks, but for numerous stakeholders such as the central banks, bankers associations, governments,and other financial authorities. Knowledge of these factors would also be helpful to the regulatory authorities and bank managers who formulate going forward policies for improved efficiency of the
Korean banking sector.
Originality/value – Unlike the previous studies on the efficiency of the Korean banking sector,the paper focuses on three different approaches: intermediation approach, value-added approach,and operating approach to differentiate how efficiency scores vary with changes in inputs and outputs. |
| format |
Article |
| author |
Sufian, Fadzlan |
| author_facet |
Sufian, Fadzlan |
| author_sort |
Sufian, Fadzlan |
| title |
Benchmarking the efficiency of the Korean banking sector: a DEA approach |
| title_short |
Benchmarking the efficiency of the Korean banking sector: a DEA approach |
| title_full |
Benchmarking the efficiency of the Korean banking sector: a DEA approach |
| title_fullStr |
Benchmarking the efficiency of the Korean banking sector: a DEA approach |
| title_full_unstemmed |
Benchmarking the efficiency of the Korean banking sector: a DEA approach |
| title_sort |
benchmarking the efficiency of the korean banking sector: a dea approach |
| publisher |
Emerald |
| publishDate |
2011 |
| url |
http://irep.iium.edu.my/5263/ http://irep.iium.edu.my/5263/ http://irep.iium.edu.my/5263/ http://irep.iium.edu.my/5263/1/Benchmarking.pdf |
| first_indexed |
2023-09-18T20:13:46Z |
| last_indexed |
2023-09-18T20:13:46Z |
| _version_ |
1777407651086336000 |