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An interactive benchmark model ranking performers - application to financial holding companies. (English) Zbl 1165.91407

Summary: This study aims to resolve the problems associated with ranking fairly for both efficient and inefficient decision making units (DMUs) by proposing an ‘interactive benchmark’ model. The main concept is derived as a result of taking one certain DMU as a fixed benchmark and estimating the efficiency scores of the remaining DMUs based on that benchmark pair by pair. The process is repeated until all of the DMUs have served as the fixed benchmark. The DMUs can then be evaluated on a fair basis by computing the average efficiency scores using the above rolling procedure. The model is applied to fourteen financial holding companies (FHCs) in Taiwan using a production transfer model that is adopted by L.M. Seiford and J. Zhu [Profitability and marketability of the top 55 US commercial banks, Manage. Sci. 45, No. 9, 1270–1288 (1999)]. The empirical results can serve as valuable reference to both policy-makers and investors.

MSC:

91B28 Finance etc. (MSC2000)
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