Original Research

The relative efficiency of bank branches in lending and borrowing: An application of data envelopment analysis

G van der Westhuizen
South African Journal of Economic and Management Sciences | Vol 8, No 3 | a1202 | DOI: https://doi.org/10.4102/sajems.v8i3.1202 | © 2014 G van der Westhuizen | This work is licensed under CC Attribution 4.0
Submitted: 19 August 2014 | Published: 19 August 2014

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G van der Westhuizen, North-West University

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Abstract

The relative efficiency of fifty-two branches of a small South African bank was estimated using Data Envelopment Analysis (DEA).  A factor responsible for the difference in efficiency between branches might be the difference in managing the asset (loans) and the liability (deposit) side of the balance sheet.  For this reason, the relative efficiency of the lending and borrowing activities was also estimated and compared to the relative efficiency of the combined (lending and borrowing) activities.In the case of the efficiency estimates for loans and deposits, the indications are that the branches were more efficient in managing the liability side (deposits) than  in managing the asset side (loans).  This means that purchased funds were not utilised efficiently.

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