Combining DEA data coverage analysis technique with BSC balanced scorecard to evaluate and compare the performance of Tejarat Bank branches

Dissertation for Master's Degree in Industrial Management

(Financial Orientation)

Abstract:

According to the necessity and importance of studying the efficiency of banks, in order to identify inefficient units and plan to improve the performance of banks, in the present study, the efficiency of 20 branches of Tejarat Bank branches in Tehran and in the period of 1389 and 1390 was measured using data and card analysis methods. A balanced score has been paid. To calculate the efficiency of branches, DEA_BSC was used with the assumption of variable return to scale and an input-oriented perspective, and according to the input and output indicators determined for each of the perspectives of the balanced score card, the efficiency score was calculated for each of the four perspectives, and then we calculated the efficiency score using the simple average as well as the weighted average based on the experts' opinions. Also, the ideal planning method of data envelopment analysis (with an input-oriented perspective) has been used to solve the problem of classical models, and the efficiency score of the branches has been calculated from this method. In the research process, the efficient and inefficient branches have been distinguished, the efficiency coefficients of each branch have been calculated and the surplus of production factors has been determined for each of the inefficient branches.

Keyword:

data coverage analysis, parallel score card, CCR, BCC

Introduction

Enjoyment of wise behavior and living together with rational work has been with man since the beginning of his life, as a result of productivity and Efficiency has been the focus of man since the beginning of creation. Humanity has always faced two problems, having unlimited desires and limited resources to achieve these desires. Therefore, he has always tried to use these resources in the best way. One of the most valuable industries of any society is the banking industry, which causes the increasing development of that society. Today, in all advanced societies, the banking industry is considered a factor for the progress of that society. Due to the mentioned reasons and the importance of the bank as one of the indicators of progress, the evaluation of the performance of the bank branches is very important. Using basic and fundamental topics for performance evaluation can be a tool for improving performance. Using it makes organizations change and improve their performance so that they can achieve predetermined goals and strategies at a more appropriate speed. In this research, it has been tried to identify and analyze the performance evaluation criteria of Tejarat Bank branches, create a suitable model using the integration of data coverage analysis model and balanced scorecard, and evaluate and compare their performance. In this regard, the level of efficiency and productivity of organizations should be calculated so that the economic growth trend can be monitored in future decision-making. In today's era, achieving economic growth through improving productivity is one of the most important economic goals of countries. Improving productivity is achieved by optimal use of production factors and plays an important role in achieving continuous economic growth and sustainable production. One of the appropriate and efficient tools in this field is data envelopment analysis, DEA, which is used as a non-parametric method to calculate the efficiency of decision-making units. On the other hand, due to the comprehensiveness of the balanced scorecard for performance evaluation and its increasing application for strategic management issues, its four perspectives have been used to evaluate the organization's performance, BSC. It provides the basis of a comprehensive framework for managers that translates the company's strategy into a coherent set of performance criteria (Zarei Metin, 2019).

In this research, BSC is used as a tool to design performance evaluation indicators and DEA as a tool to measure performance.

Existing methods of evaluating and measuring the efficiency of bank units are often experimental and lack solid scientific support, and in addition, due to the standard In the absence of these methods, their results in different banks cannot be compared with each other (Bashli, 2012). On the other hand, every economic enterprise must always have the necessary dynamism to continue its existence in the course of competition with other existing enterprises in the same industry, due to the increasing growth of technology and the wide wave of information and the development of diverse services, so the continuous control and evaluation of the activity and performance of that enterprise is an inevitable necessity.In this regard, various indicators are used, some of which include effectiveness, efficiency, innovation, productivity, etc. Among the existing criteria, efficiency and its development and improvement are very important and many experts have addressed it. Undoubtedly, without evaluating the performance of organizations, it is not possible to ensure the effectiveness and efficiency of organizations, which is a necessary condition for participating in international competition (Soltan Mohammadi, 2019). It should be noted that the performance evaluation should be appropriate to the position and function of the organization, and also to maintain the competitive advantage of the company, it should be evaluated. At the current stage, the banking and insurance industries are one of the most important economic institutions in advanced and developing societies. Evaluating the performance of branches allows the senior managers of the organization to have a proper analysis of the performance of their units. In general, what cannot be measured cannot be managed well. The fundamental step in the sustainability of such a management method requires us to achieve a balance between the inputs and outputs of the organization by approaching efficient scientific and practical methods and to institutionalize productivity with continuous performance evaluation. Achieving the aforementioned demands and necessities and what this research is looking for will be possible by measuring activities and through the use of scientific and quantifiable models and finally designing and establishing a performance system. Measurement helps to identify effective factors in productivity, determine priorities, and helps in decision-making, and provides valuable information to assess the impact of changes and evaluate resources. In fact, this information represents the extent to which the company under study uses its resources optimally, and how it performs compared to other companies (Mohammadi, 2009).

Common methods of evaluating previous performance mainly focused on the financial aspects of the organization and focused their indicators around it, but the balanced scorecard of its indicators into four financial perspectives; processes; The customer and the learning and growth of human resources have developed and seek to create a balance between financial goals as a result of past performance (retrospective indicators) and three other indicators (prospective indicators). Also, DEA data envelopment analysis models evaluate the ability of each decision-making unit (DMU) to convert inputs into outputs, which is called efficiency. This method is one of the valid techniques for performance evaluation and comparison.

It is worth mentioning that BSC and DEA techniques are tools that cannot be considered as alternative techniques. Rather, their combined use in the performance evaluation system seems necessary. In other words, a systematic connection can be established between the two mentioned models. so that he used one of them as a supplement and covering the weaknesses of the other model.

Therefore, in this research, by combining two BSC balanced scorecard methods and DEA data coverage analysis, which are among the most reliable and practical methods of measuring efficiency and productivity, we evaluate the performance of selected branches of Tejarat Bank of Tehran province. increased, but the overall performance of many economic activities cannot be justified considering the material and human resources they have. Therefore, neglecting problems such as low relative productivity, in addition to denying the opportunity for economic growth and development, can be the cause of many economic, cultural and political problems in the future (Abbasian, 2016). Productivity growth is very effective on many main economic, political and social phenomena such as reducing inflation, increasing public welfare, increasing economic competitiveness and increasing employment. In a simple view, productivity is the ratio of efficiency to benefits consumed; Therefore, if more goods and services are produced with the same cost or a certain amount of product is produced at a lower cost, benefits for the whole society will be obtained, which can be effective for providing a better life for the members of the society. But achieving productivity is the highest goal and the most valuable in all organizations, so that the cycle of productivity in the four stages of measurement - analysis - planning and implementation should be established in organizations. The most important feature of this cycle is its formation based on practical axes and the quantification of its indicators (Mohammadi, 2009).