Measuring the Technical Efficiency of Banks in Singapore for the Period 1993-99: An Application and Extension of the Bauer et al. (1997) Technique

Abstract

Although considerable effort has been invested in the measurement of financial institution efficiency, hardly any empirical research has focussed on the properties and consistency of efficiency rankings derived from the data envelopment analysis (DEA) methodology. Following the seminal work of Bauer, Berger, Ferrier, and Humphrey (1997), this paper employs data on Singaporean banking for the period 1993 to 1999 to develop efficiency scores and rankings for Singapore banks. It then invokes the five consistency conditions developed by Bauer et al. (1997) to examine these scores and rankings. Our approach allows researchers to experiment with different models and select the most appropriate model for policy purposes.