A Modified Super-Efficiency in the Range Directional Model

The range directional model (RDM) relaxes the assumption of non-negativity of inputs and outputs in the conventional data envelopment analysis (DEA) with the aim of evaluating the efficiency of a decision-making unit (DMU) when some data are negative. Although the concept of super-efficiency in the RDM contributes to enhancing discriminatory power, the formulated model may lead to the infeasibility problem for some efficient DMUs. In this paper, we modify the super-efficiency RDM (SRDM) model to overcome the infeasibility problem occurring in such cases. Our method leads to a complete ranking of the DMUs with negative data for yielding valuable insights that aid decision makers to better understand the findings from a performance evaluation process. The contribution of this paper is fivefold: (1) we detect the source of infeasibility problems of SRDM in the presence of negative data, (2) the proposed model in this study yields the SRDM measures regardless of feasibility or infeasibility of the model, (3) when feasibility occurs, the modified SRDM model results in the scores that are the same as the original model, (4) we differentiate the efficient units to improve discriminatory power in SRDM, and (5) we provide two numerical examples to elucidate the details of the proposed method

Banks’ efficiency and credit risk analysis using by-production approach: the case of Iranian banks

This article uses a by-production approach that integrates credit risk to monitor bank efficiency. The method overcomes the possible misspecification issues of the commonly assumed weak disposability (WDA) of undesirable outputs. In addition, our measure extends the classic by-production approach by including statistical aspects through subsampling techniques. We have also provided an algorithm to correct related infeasibilities. Using this approach, we investigate the performance of Iranian banks and credit risk management in the sector for the period 1998–2012. Non-performing loans (NPLs) have been used as an undesirable output and proxy for credit risk in our models. Based on our empirical results, although the banks generally exhibited efficiency improvements over time, their credit risk performance deteriorated considerably after the regulatory changes introduced in 2005. These findings confirm that credit quality can be monitored more actively across Iranian banks

A DEA-based incentives system for centrally managed multi-unit organisations

In multi-unit organisations such as a bank and its branches or a national body delivering publicly funded health or education services through local operating units, the need arises to incentivize the units to operate efficiently. In such instances, it is generally accepted that units found to be inefficient can be encouraged to make efficiency savings. However, units which are found to be efficient need to be incentivized in a different manner. It has been suggested that efficient units could be incentivized by some reward compatible with the level to which their attainment exceeds that of the best of the rest, normally referred to as “super-efficiency”. A recent approach to this issue (Varmaz et. al. 2013) has used Data Envelopment Analysis (DEA) models to measure the super-efficiency of the whole system of operating units with and without the involvement of each unit in turn in order to provide incentives. We identify shortcomings in this approach and use it as a starting point to develop a new DEA-based system for incentivizing operating units to operate efficiently for the benefit of the aggregate system of units. Data from a small German retail bank is used to illustrate our method

A Bayesian approach for correcting bias of data envelopment analysis estimators

The validity of data envelopment analysis (DEA) efficiency estimators depends on the robustness of the production frontier to measurement errors, specification errors and the dimension of the input-output space. It has been proven that DEA estimators, within the interval (0, 1], are overestimated when finite samples are used while asymptotically this bias reduces to zero. The non-parametric literature dealing with bias correction of efficiencies solely refers to estimators that do not exceed one. We prove that efficiency estimators, both lower and higher than one, are biased. A Bayesian DEA method is developed to correct bias of efficiency estimators. This is a two-stage procedure of super-efficiency DEA followed by a Bayesian approach relying on consistent efficiency estimators. This method is applicable to ‘small’ and ‘medium’ samples. The new Bayesian DEA method is applied to two data sets of 50 and 100 E.U. banks. The mean square error, root mean square error and mean absolute error of the new method reduce as the sample size increases

A Bayesian approach for correcting bias of data envelopment analysis estimators

The validity of data envelopment analysis (DEA) efficiency estimators depends on the robustness of the production frontier to measurement errors, specification errors and the dimension of the input-output space. It has been proven that DEA estimators, within the interval (0, 1], are overestimated when finite samples are used while asymptotically this bias reduces to zero. The non-parametric literature dealing with bias correction of efficiencies solely refers to estimators that do not exceed one. We prove that efficiency estimators, both lower and higher than one, are biased. A Bayesian DEA method is developed to correct bias of efficiency estimators. This is a two-stage procedure of super-efficiency DEA followed by a Bayesian approach relying on consistent efficiency estimators. This method is applicable to ‘small’ and ‘medium’ samples. The new Bayesian DEA method is applied to two data sets of 50 and 100 E.U. banks. The mean square error, root mean square error and mean absolute error of the new method reduce as the sample size increases

Calculating Super Efficiency of DMUs for Ranking Units in Data Envelopment Analysis Based on SBM Model

There are a number of methods for ranking decision making units (DMUs), among which calculating super efficiency and then ranking the units based on the obtained amount of super efficiency are both valid and efficient. Since most of the proposed models do not provide the projection of Pareto efficiency, a model is developed and presented through this paper based on which in the projection of Pareto-efficient is obtained, in addition to calculating the amount of super efficiency. Moreover, the model is unit invariant, and is always feasible and makes the amount of inefficiency effective in ranking

PERFORMANCE ANALYSIS OF COMPANIES IN SERBIA BASED ON THE LMAW-DNMA METHOD

Recently, the importance of applying multi-criteria decision-making methods in the economy has been increasing. With their help, more realistic results are achieved in the function of improvement in the future by applying relevant measures. Based on that, this paper analyzes the performance of companies in Serbia based on the LMAW-DNMA method. According to the results of the DNMA method, the top five companies in Serbia include: TELEKOM SRBIJA AD BELGRADE, DELTA HOLDING DOO BELGRADE, MK GROUP DOO BELGRADE, JP SRBIJAGAS NOVI SAD and HEMOFARM AD VRŠAC. The best performance was recorded at the company TELEKOM SRBIJA AD, BELGRADE. The company with the worst performance is YURA CORPORATION DOO RAČA. This positioning of companies in Serbia according to performance was influenced by numerous factors. These are: general economic conditions, inflation, interest rate, exchange rate, employment, living standards of the population, the Covid-19 pandemic, and the energy crisis. Likewise, the efficiency of human resource, asset, capital, sales and profit management. The application of new concepts of cost management (for example, calculation of costs by basic activities) and digitization of the entire business play a significant role in this. Effective control of these and other factors can significantly influence the achievement of the target performance of companies in Serbia

Measurement and Analysis of the Dynamics of Financial Performance and Efficiency of Trade in Serbia Based on the DEA Super-Radial Model

The issue of measuring and analyzing the dynamics of financial performance and trading efficiency is continuously current, significant and complex. Based on that, this paper measures and analyzes the financial performance and efficiency of trade in Serbia using the strategic profit model and the DEA ( Data Envelopment Analysis) Super-Radial model. According to the strategic profit model, the financial performance of trade in Serbia has recently improved. According to the results of the Super-CCR-I model in the period 2002 - 2020 trade in Serbia was not efficient in any year. According to the results of the Super-CCRO model, trade in Serbia in the period 2002-2020 was not efficient in any year. According to the results of the Super-BCC-I model in the period 2002 - 2020, trade in Serbia was efficient in 2020. According to the results of the Super-BCC-O model, trade in Serbia in the period 2002 - 2020 was efficient in 2002 and 2015. In order to to improve the financial performance and efficiency of trade in Serbia in the future, it is necessary to manage input - output elements (human resources, assets, capital, sales and net profit) as efficiently as possible. Digitization of the entire business plays a significant role in this