Improving the discrimination power through compromise solution approach: Malaysian banks as illustration

Hanafi, Hocine and Larbani, Moussa (2014) Improving the discrimination power through compromise solution approach: Malaysian banks as illustration. In: 12th International Conference on Data Envelopment Analysis, 14th-17th April 2014, Kuala Lumpur.

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Abstract

The conventional DEA gives each DMU an extreme flexibility in selecting its own weights in order to get its optimal efficiency score, which may result in a relatively high number of efficient DMUs, and prevents DEA from being a robust approach in determining the most efficient unit. Moreover, this flexibility hampers a common base for comparison and leads to a weak discrimination power among all DMUs as well as unrealistic weights allocation among inputs and outputs for all or part of DMUs. In this paper we show that these drawbacks can be satisfactorily overcome by compromise solution approach (Kao and Hung, 2005). We extend the Kao and Hung’s approach to the BCC model and scale efficiency computation. To compare the proposed models with the conventional DEA models, a sample of 30 Malaysian commercial banks is examined for the period 2006 to 2011, in terms of efficiency scores, ranking and returns to scale.

Item Type:	Conference or Workshop Item (Full Paper)
Additional Information:	3917/42113
Uncontrolled Keywords:	Data Envelopment Analysis; Multiple Criteria Decision Making; compromise solution; discrimination power; weight distribution
Subjects:	H Social Sciences > HB Economic Theory > HB131 Methodology.Mathematical economics. Quantitative methods
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences > Department of Business Administration
Depositing User:	Professor Larbani Moussa
Date Deposited:	26 Feb 2015 18:12
Last Modified:	26 Feb 2015 18:12
URI:	http://irep.iium.edu.my/id/eprint/42113

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