DEA/AR efficiency and profitability of Mexican banks. A total income model.

*(English)*Zbl 0953.90539Summary: Data Envelopment Analysis (DEA) and Linked-Cone Assurance Region (LC-AR) models are used in this paper to investigates the efficiency and profitability potential of Mexican banks as they engage in activities that incur interest and non-interest expenses and produce income. DEA provides a measure of each bank’s relation to the best-practice frontier for its competitors. This can provide a better quality-benchmark than using industry averages or a particular peer bank as the benchmark. The banks are classified into efficient and inefficient sets. Multiplier values for AR-inefficient banks with unique slacks indicate the potential for management to improve the bank’s performance relative to its peers. LC-ARs that provide economically reasonable bounds for the multipliers lead to profitability potential, as distinct from efficiency, results.

##### MSC:

90B50 | Management decision making, including multiple objectives |

##### Keywords:

data envelopment analysis; assurance regions; efficiency/profitability potential; bank management; quality-benchmarking
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\textit{W. M. Taylor} et al., Eur. J. Oper. Res. 98, No. 2, 346--363 (1997; Zbl 0953.90539)

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