Data envelopment analysis and malmquist indices for measuring group performance

Abstract

This paper develops measures, based on the Malmquist index, that enable the decision making units internal inefficiencies to be distinguished from those associated with their group (or program) characteristics. The applicability of these measures is illustrated with the assessment of bank branches performance. The analysis involves the construction of an index reflecting the relative performance of branches in four different regions, which can be decomposed into an index for the comparison of within-group efficiency spread, evaluating internal managerial efficiencies, and an index for the comparison of frontier productivity, reflecting the impact of environmental factors and regional managerial policies on branches productivity.