Evaluation of the Performance of Post Bank of Iran (the branches of Tehran province) Using the Data Envelopment Analysis (DEA) Farideh Haqh Shenas Kashani (PhD) Assistant professor in College of Management, Islamic Azad University, branch of Central Tehran- corresponding author Arefeh Fadavi Asqari (PhD) Assistant professor in College of Management, Islamic Azad University, branch of Central Tehran Mahdi Javanmard M.A. Graduated in College of Management, Islamic Azad University, branch of Central Tehran Abstract Any organization requires an evaluation system in order to becoming aware from the extent of desirability of its subsets activities to assess this desirability. Also, as an organization, banks are not exceptions. But the investigation of the existing methods of assessing bank performance indicates that these methods are from the experimental type and include a series of financial proportions which their results are not comparable in different branches due to the standards and heterogeneity of the banks activities. Today, new techniques are used in order to assess the banks performances and one of their most applicable ones is data envelopment analysis (DEA). This technique is based on the linear programming approach and its main purpose is to compare and assess a number of the similar decision maker units (DMUs) which have different values of consuming inputs and producing outputs. In this paper and in order to assess the relative efficiency of branches of Post Bank of Iran in Tehran province, we used the models of basic data envelopment analysis technique, model BBC (o) with the output oriented nature and by means of DEA-SOLVER software and the extent of the efficiency for each branch for the years of 0 and 0 as following: branches have been efficient in both years. branches have been in both years. branches have been efficient in 0 but in 0. branches have been in 0 but efficient in 0. The extent of efficiency of the branches in 0 was 6. and in 0, it was 8. which indicates that the branches of Tehran province have had a high efficiency in 0, and finally, using Kruskal Wallis test and SPSS software, it was determined that regarded to the fact that about all output variables (such as deposits, facilities, services and dividends received) the significance level of sig is lower than the probability of error level (α= 0.0), so, the rank of branches is not the same in each of these variables. Keywords: Post Bank of Iran, Data Envelopment Analysis, evaluation, performance. http://www.ijhcs.com/index.php/ijhcs/index Page 68
Introduction: In the contemporary world, banks play a considerable role in growth and development of the economic systems, because today, the economic development, increase in prosperity and improvement of the life level in any country depend upon the extent of investments through banking system. There is several methods in order to assess the efficiency of firms and consequently the banks which the financial proportions and parametric and nonparametric methods like the data envelopment analysis can be named from their examples. Statement of the Problem: Banks play the fundamental role in the following cases:. navigation and management of the dispersed funds. controlling the inflation pressure in the country s economy. optimum use of the resources and the existing costs Currently, like the other banks, in Post Bank, the efficiency is determined based on the resources and consumptions of the branches not the academic methods. The Importance and Necessity of Conducting the Research: Correction and improvement of banking services, paying attention to the financial statements, marketing, innovation in provision of services and competing with the other banks Research s Purposes:. Identifying factors affecting the efficiency of the units (selecting appropriate inputs and outputs regarding too the purposes of the organization). determining the efficient and branches. measuring the efficiency of each of the branches of Post Bank of Iran (branches in Tehran province). comparing and ranking the branches in terms of each of the outputs Research s Model: Input Output DEA Specify the Efficiency Ranking the Units Specify the reference Models with Output Nature: In this category, with assuming the input levels constant, we try to maximize the rate of producing the outputs. Research Hypotheses: http://www.ijhcs.com/index.php/ijhcs/index Page 69
. the branches of Post Bank of Iran in Tehran province are different in terms of efficiency in the aspect of deposits.. the branches of Post Bank of Iran in Tehran province are different in terms of efficiency in the aspect of facilities.. the branches of Post Bank of Iran in Tehran province are different in terms of efficiency in the aspect of services.. the branches of Post Bank of Iran in Tehran province are different in terms of efficiency in the aspect of dividends received. Research s Questions:. how much is each of the branches efficient?. how is the ranking of the efficiency of the branches?. what are the efficient and branches?. how much is the optimum amount of the output variables in order for maximizing the efficiency? Literature Review: In recent decades, assessing performance and productivity has been paid a significant attention to both by the scientific communities and managers and the other consumers. Many methods and techniques have been created for this assessment and each of them introduces a set of indices in order to balance the traditional and single dimensional viewpoints about the performance; one of the problems of utilizing DEA models in the lack of resolution power (in case of inadequate DMUs) and unreal distribution of weight into the inputs and outputs of the model and compared to the classic models, the data envelopment model has more ability in the resolution power and provision of real weights based on the goal model programming (Mehregan, 00, 6). Performance Evaluation: Performance evaluation refers to the set of measurements and activities done in order to increase the optimum use level of the facilities and resources for achieving purposes and economic methods along with efficiency and effectiveness. In this way, the progress rate towards achieving the determined purposes is evaluated (Aqa Rafiei, 00, ). Performance Assessment Purposes: Performance assessment purposes have been designed in six major goals:. putting the strategies and activities in one direction. controlling operations. management and interaction with the stakeholders. accountability. motivating and rewarding the employees 6. The Concept of Efficiency: Efficiency is the ratio of the real output to the standard output, or indeed, the ratio of the works done to the works to be done. Types of Efficiency:. Technical efficiency,. Professional efficiency,. Structural efficiency,. Scale efficiency, and. Economic efficiency Methods of Measuring Efficiency: http://www.ijhcs.com/index.php/ijhcs/index Page 0
. parametric methods: in this method, a specific production function is estimated by using different statistical and economical methods and then the efficiency is determined by using this function (Mehregan, 00, ).. nonparametric methods: in this approach, there is no need for determination of production function or the functional relational form among the inputs and outputs, value or price of the inputs and outputs of the evaluated units. The data envelopment analysis is a nonparametric method which evaluates the relative efficiency of the units compared to each other. In this method, there is no need for identifying the type of production function and there is no limitation in the number of inputs and outputs (Mehregan, 008, 6). Research Methodology: - this study is an applicable in terms of the purpose and a descriptive study in terms of nature and method. Given that the investigated data is related to the past, it is from the kind of secondary data and the mentioned data has been extracted from the statistical system existing in the bank. - because of the limitation of the statistical society ( branches), all of the statistical society are used and no sampling is done. - the time territory of this study is the years of 0 and 0 (9 and 9 Solar Hijri) and the time of conducting it is from March 0 to November 0. - the objective territory of this research is to assess the performance of branches of Post Bank of Iran (Tehran province branches) by using the data envelopment analysis and using specific inputs and outputs. The research conducting method can be divided into three stages.. according to the review of research literature, there are three approaches for selecting inputs and outputs; with the idea of the bank s experts, the productive approach was selected.. extraction of the input and output rates from the bank s statements. the relative efficiency of the branches has been determined by using DEA model and DEA SOLVER software. The software used for solving the model and extracting the solutions: in this research, DEA SOLVER software which is a very strong software and has a high flexibility due to the completeness of responses for evaluation of the efficiency of the branches. Also Excel software has been widely used for collecting data and classifying it. Data Analysis: Investigation of normality/abnormality of the variables: H0: distribution is normal H: distribution is not normal Test s result Possibility of error Significance level Variables )α (level Distribution is 0.0 0.000 Deposits not normal Distribution is 0.0 0.000 Received dividends not normal Distribution is 0.0 0.000 Received and http://www.ijhcs.com/index.php/ijhcs/index Page
not normal Distribution is not normal 0.0 0.000 commitment facilities (Loans) Services Table -: the results of normality of distribution of the variables in 0 Test s result Distribution is not normal Distribution is not normal Distribution is not normal Distribution is not normal Possibility of error )α (level 0.0 0.0 0.0 0.0 Significance level 0.000 0.000 0.000 0.000 Variables Deposits Received dividends Received and commitment facilities (Loans) Services Table -: the results of normality of distribution of the variables in 0 According to the above tables, it is determined that the data distribution of none of them is normal. Prioritization of the branches in Post Bank in terms of each of the output variables using Kruskal Wallis in year 0 H0: the branches are similar in terms of the studied output variables H: the branches are not similar in terms of the studied output variables Deposits Facilities Services Dividends received from the central account Chi Square (statistic of the test).000.000.000.000 Freedom degree Significance level 0.000 0.000 0.000 0.000 The result of Kruskal Wallis test for the studied output variables in 0 Regarding to fact that about all variables (the deposits, facilities, services and received dividends) the significance level is smaller than the possibility of error level (α=0.0), therefore, the rank of the branches in each of these variables is not the same. Year 0 Deposits Facilities Services Dividends received from the central account Chi Square (statistic of the test).000.000.000.000 Freedom degree http://www.ijhcs.com/index.php/ijhcs/index Page
Significance level 0.000 0.000 0.000 0.000 The result of Kruskal Wallis test for the studied output variables in 0 Regarding to fact that about all variables (the deposits, facilities, services and received dividends) the significance level is smaller than the possibility of error level (α=0.0), therefore, the rank of the branches in each of these variables is not the same. The necessary rate of dividends to become efficient (dividend).89 60.00899 0 Necessary amount to achieve efficiency (services) 9.868 69.09 089.980. Efficiency Efficiency Received Branch rate rate dividend Services Sarcheshme 0.9686.0890 8 Khordad 0.86069.6000 86 98 Kashani 0.9.096 0 Iran 0.696.09 Khodro 0 0 8 66.69 Valieasr 0.6908.98 80 0. 6.60 0.669988.9 Beheshti 0 9.8 6 968.866 Azadi 6 9 9 The necessary amount (dividend / services) to become efficient of the branches in the year 0 Branch Necessary The necessary amount to. rate to become achieve Efficiency Efficiency efficient efficiency rate rate Facilities (facilities) Deposit (deposit) Sarcheshme 0.9686.0890 08.096 6. Khordad 0.86069.6000 8 6.96 8 9.08 Kashani 0.9.096 6 8.66 9 9886.0 Iran 0.696.09 086 6. 060 Khodro 690.06 Valieasr 0.6908.98 8 0.6 00 86.9 0.669988.9 8 66.08 0 Beheshti 608. Azadi 9 099 The necessary amount (facilities / deposit) to become efficient of the branches in the year 0 Conclusion: In this study the amount of efficiency of the branches of Tehran province has been calculated based on the BBC (O) model with the output nature and the obtained average efficiency is as follows: http://www.ijhcs.com/index.php/ijhcs/index Page
9 8. 9 6. Model / Year BCC (O) The amount of efficiency of the branches of Tehran province with BCC (O) method for the studied years This result indicates that in 0, more branches in Tehran province have been efficient compared to the year 0. The following branches have been efficient () in both studied years ( branches). Ferdowsi Tajrish Shahre Shahisd Kargar Kuye Daneshgah Rey Fallahi Varamin Resalat Vanak Mirzaye Pirouzi Tehran Shirazi Mofatteh Nabovat Satarkhan Bazare Sa adat Abad Molasadra Miveh va Tareh Mobl Bar Square Majles Shahriar Eslam Shahr Pars Navard Shahrake Qarb (Tehransar) The efficient branches in both of the years The following branches have been in 0 but efficient in 0 ( branches). Afsarieh Damavand Rostam Abad Africa Blvd Nazi Abad (Aqa Babaei) Imam Roudehen Firouzkouh Robat Karim Doctor Shari ati Khomeini Pole Choubi Pakdasht Eastern Shoush The efficient branches in 0 The following branches have been efficient in 0 but in 0 ( branches). Iran Khodro Valieasr Tehran Shhaid Beheshti Azadi Tehran branches in 0 The following branches have been in both of the years ( branches). Sarcheshmeh Ayat Allah Kashani Khordad Inefficient branches in both of the years In the following table, the rate of efficiency and the rank of each of the branches during the studied years have been determined. The branch rank in terms of bank Priority through the Kruskal Wallis test 9 9 Efficiency rate 9 9 / (measured based on the data envelopment analysis) 9 9 Name and code of the branch Variable s name 6 0.0 Afsarieh (00) Deposits http://www.ijhcs.com/index.php/ijhcs/index Page
Level Level Level 8 9 0 0 8 6 8 0 9 9 9 6 8 0 8 0.86068 0.968 0.669988 0.606 0.80 0.86806 0.6 0.68 0.680 0.9669 0.8698 0.6086 0.0 Imam Khomeini (0006) Africa Blvd (00) Pars Navard (008) Khordad (066) Pakdasht (008) Pole Choubi (00) Pirouzi (0006) Pole Tajrish (000) Damavand (006) Doctor Shari ati (0096) Resalat (006) Rostam Abad (009) Roudehen (00) Sarcheshmeh (000) Shahre Rey (00) Beheshti (008) Fallahi (008) Mofatteh (00) http://www.ijhcs.com/index.php/ijhcs/index Page
Level 6 9 9 8 6 8 9 0 6 6 6 8 9 0066 0.698 0.9 0.06 0.86 Eastern Shoush (000) Firouzkouh (009) Majles (008) Nabovvat (099) Varamin (008) Azadi (006) Eslamshahr (00) Iran Khodro (008) Bazare Mobl (009) Robat Karim (068) Sattarkhan (0009) Sa adat Abad (00088) Shahriar (00) Shahrake Qarb (0899) Ferdowsi (00) Molasadra (096) Mirzaye Shirazi (06) Mive va Tareh Bar Square (0069) http://www.ijhcs.com/index.php/ijhcs/index Page 6
0 0 0 0.690 0.9 0.698 0.80 Nazi Abad (00) Valieasr (0009) Vanak (09) Kargar (000) Kashani (000) Kouye Daneshgah (0) Level Level 9 6 9 9 0 9 8 9 8 8 0.86068 0.0 0.606 0.80 0.86806 0.6 0.68 0.680 0.9669 0.8698 Afsarieh (00) Imam Khomeini (0006) Africa Blvd (00) Pars Navard (008) Khordad (066) Pakdasht (008) Pole Choubi (00) Pirouzi (0006) Pole Tajrish (000) Damavand (006) Doctor Shari ati (0096) Resalat (006) Rostam Abad Facilities http://www.ijhcs.com/index.php/ijhcs/index Page
(009) Level Level 8 8 0 6 8 8 0 6 0 0 6 9 0 9 6 6.0968 0.669988 0.66 0.698 0.6086 0.0 0.9 0.06 0.86 Roudehen (00) Sarcheshmeh (000) Shahre Rey (00) Beheshti (008) Fallahi (008) Mofatteh (00) Eastern Shoush (000) Firouzkouh (009) Majles (008) Nabovvat (099) Varamin (008) Azadi (006) Eslamshahr (00) Iran Khodro (008) Bazare Mobl (009) Robat Karim (068) Sattarkhan (0009) Sa adat Abad (00088) http://www.ijhcs.com/index.php/ijhcs/index Page 8
9 6 0 8 6 0 0.690 0.9 0.698 0.80 Shahriar (00) Shahrake Qarb (0899) Ferdowsi (00) Molasadra (096) Mirzaye Shirazi (06) Mive va Tareh Bar Square (0069) Nazi Abad (00) Valieasr (0009) Vanak (09) Kargar (000) Kashani (000) Kouye Daneshgah (0) Level 9 0 0 0 0.86068 0.0 0.606 0.80 0.86806 Afsarieh (00) Imam Khomeini (0006) Africa Blvd (00) Pars Navard (008) Khordad (066) Services http://www.ijhcs.com/index.php/ijhcs/index Page 9
Level Level 8 6 9 8 6 6 8 0 9 6 0 0 8 8 0.968 0.669988 0.6 0.68 0.680 0.9669 0.8698 0.6086 0.0 0.9 0.06 Pakdasht (008) Pole Choubi (00) Pirouzi (0006) Pole Tajrish (000) Damavand (006) Doctor Shari ati (0096) Resalat (006) Rostam Abad (009) Roudehen (00) Sarcheshmeh (000) Shahre Rey (00) Beheshti (008) Fallahi (008) Mofatteh (00) Eastern Shoush (000) Firouzkouh (009) Majles (008) Nabovvat (099) http://www.ijhcs.com/index.php/ijhcs/index Page 80
Level 0 9 9 6 8 0 8 8 9 6 9 6 9 0.66 0.698 0.690 0.9 0.86 0.698 0.80 Varamin (008) Azadi (006) Eslamshahr (00) Iran Khodro (008) Bazare Mobl (009) Robat Karim (068) Sattarkhan (0009) Sa adat Abad (00088) Shahriar (00) Shahrake Qarb (0899) Ferdowsi (00) Molasadra (096) Mirzaye Shirazi (06) Mive va Tareh Bar Square (0069) Nazi Abad (00) Valieasr (0009) Vanak (09) Kargar (000) Kashani (000) http://www.ijhcs.com/index.php/ijhcs/index Page 8
8 Kouye Daneshgah (0) Level Level 9 9 8 9 9 9 0 6 9 9 9 8 0 6 0 0.6068 0.968 0.0 0.606 0.80 0.86806 0.6 0.68 0.680 0.9669 0.8698 0.6086 0.0 Afsarieh (00) Imam Khomeini (0006) Africa Blvd (00) Pars Navard (008) Khordad (066) Pakdasht (008) Pole Choubi (00) Pirouzi (0006) Pole Tajrish (000) Damavand (006) Doctor Shari ati (0096) Resalat (006) Rostam Abad (009) Roudehen (00) Sarcheshmeh (000) The received dividends from central account http://www.ijhcs.com/index.php/ijhcs/index Page 8
Level Level 9 9 9 9 9 9 9 9 9 9 9 9 8 6 6 9 8 9 9 0.669988 0.66 0.698 0.9 0.06 0.86 Shahre Rey (00) Beheshti (008) Fallahi (008) Mofatteh (00) Eastern Shoush (000) Firouzkouh (009) Majles (008) Nabovvat (099) Varamin (008) Azadi (006) Eslamshahr (00) Iran Khodro (008) Bazare Mobl (009) Robat Karim (068) Sattarkhan (0009) Sa adat Abad (00088) Shahriar (00) Shahrake Qarb (0899) http://www.ijhcs.com/index.php/ijhcs/index Page 8
9 6 Ferdowsi (00) 9 Molasadra (096) 9 0 Mirzaye Shirazi (06) 9 Mive va Tareh Bar Square (0069) 9 Nazi Abad 0.698 (00) 9 Valieasr 0.690 (0009) 9 Vanak (09) 9 Kargar (000) 9 Kashani 0.9 0.80 (000) 9 Kouye Daneshgah (0) Comparing the efficiency (based on the data envelopment analysis) and the rank of the branches (with Kruskal Wallis). The Results of the Research Hypotheses: The test results Test s statistic Significance level Hypothesis title Hypothesis number H0 hypothesis is.000 0.000 Different branches in terms of deposits rejected H0 hypothesis is.000 0.000 Different branches in terms of facilities rejected H0 hypothesis is.000 0.000 Different branches in terms of services rejected H0 hypothesis is rejected.000 0.000 Different branches in terms of the received dividends from the central account The Results of the Research Hypotheses Regarding to the above table, it is determined that the branches of Post Bank are different in terms of the output rates; thus, in the following tables, the status of the major efficient branches has been determined in terms of the rate of efficiency and rank. http://www.ijhcs.com/index.php/ijhcs/index Page 8
Deposits Level of the Rank (Kruskal Wallis) Efficiency rate branch ( in terms of bank) 9(0) 9(0) 9(0) 9(0) Level 8 Branch name Vanak Mofatteh Fallahi Molasadra Mirzaye Shirazi Comparison of efficiency (based on the data envelopment analysis) and ranking the major efficient branches (with Kruskal Wallis) based on the deposits Facilities Level of the branch ( in Rank (Kruskal Wallis) Efficiency rate Branch name terms of (0)9 9(0) (0)9 9(0) bank) Vanak Ferdowsi Mirzaye Shirazi Fallahi 9 Shahriar Comparison of efficiency (based on the data envelopment analysis) and ranking the major efficient branches (with Kruskal Wallis) based on the facilities Services Level of the branch ( in Rank (Kruskal Wallis) Efficiency rate Branch name terms of 9(0) 9(0) 9(0) 9(0) bank) Mirzaye Shirazi 8 Fallahi Varamin Shahre Rey Level 9 Pirouzi Resalat Vanak Comparison of efficiency (based on the data envelopment analysis) and ranking the major efficient branches (with Kruskal Wallis) based on the services Received dividends from the central account http://www.ijhcs.com/index.php/ijhcs/index Page 8
Level of the branch ( in Rank (Kruskal Wallis) Efficiency rate Branch name terms of bank) 9 (0) 9(0) 9(0) 9(0) Level Mofatteh 6 Resalat Shahis Fallahi Shahre Rey 8 Beheshti 9 Vanak 9 Molasadra 6 Pole Tajrish Comparison of efficiency (based on the data envelopment analysis) and ranking the major efficient branches (with Kruskal Wallis) based on the Received dividends from the central account The results obtained from the data envelopment analysis are consistent with the results obtained from the Kruskal Wallis test. Research Limitations: - one of the problems of this study is that due to the lack of mechanization of the statistic collection and its locative dispersion and also its time consuming feature for the studied period, the possibility of analyzing efficiency in the branches all over the country was not provided and accordingly, the analysis of efficiency of branches of Post Bank in Tehran province was investigated. Recommendations Based on the Research s Findings:. the efficient units can be used as the pattern (reference unit) for the units.. see tables number -6 and - in order for the branches to achieve the technical efficiency. For example, if the branch of Sarcheshmeh wants to turn into an efficient branch, it is necessary for it to increase the dividend rate from to, the facilities rate from 08 to, services from 8 to 9 and deposits from to 6.. the senior managers of Post Bank are recommended to use the model presented in this study for evaluating the performance, ranking and comparing the branches.. it is recommended to use the data envelopment analysis for evaluation of performance of the bank s branches.. the senior managers of Post Bank are recommended to use the ranking of this study in order to rank the branches. Recommendations for Future Researches:. in this study, only the quantitative factors have been considered, it is suggested to consider the qualitative factors such as the services quality, employees satisfaction and so on in the future researches.. this study has been conducted for the years 0 and 0 (9 and 9 Solar Hijri). It is suggested to continue it for the future years. http://www.ijhcs.com/index.php/ijhcs/index Page 86
. in order to conduct completing researches, it is suggested to do a similar study to this research for all branches all over the country and in different provinces, also the provinces be compared with each other and be ranked based on this method.. in this study, evaluation has been done based on the outputs; it is recommended to use the integrated models which include inputs and outputs.. it is recommended to investigate the effects of change in management on the efficiency of the branches of Post Bank. http://www.ijhcs.com/index.php/ijhcs/index Page 8
References Persian References: Asqar Pour, M.J. (00), the Standard Decision Maker, (the third edition), Tehran: University of Iran Publication Institute Omidi Nezhad, M., September (009), The Report of Efficiency of the banking System of the Country, Tehran: Iran Institute for Banking Training HaqhShenas Kahshani, F. (0), The Statistic and Probability in Management and Economy, the first volume, the third edition, Avaye Nour publication Alizadeh, Q.R. (00), Comparing the Results of Elevation or Descend of Ranking of Efficiency of the Bank Branches Based on DEA Model of the Efficiency Index Mehregan, M.R. (008), Qualitative Models for Assessing the Efficiency of Organizations, (the second edition, DEA), Tehran: University of Tehran Publication Institute Nik Ne mat, Z. (00), Evaluation of the Efficiency of Tejarat Bank by Means of the Data Envelopment Analysis Method (DEA) English References: Banker, R. D., Charnes, A.; Cooper, W. W., (98), Some Models for Estimating Technical Efficiencies in DEA, Management Science, 0(9):08-90 Charnes, A.; Cooper, W. W. and Golany, B, Seiford, L, Stutz, J. (98). "Foundation of data envelopment analysis for pareto-koopmans efficient empirical production function", Journal of Econometrics,, pp: 9-0 Coelli, T, et al (998), An Introduction to Efficiency and Productivity Analysis, Kluwer Academic Publishers. Cooper, W. W. and Golany, B, Seiford, L, Zhu, J. (00). Handbook on data envelopment analysis, physical-verlay. Cooper, W. W. and Golany, B, Seiford, L, Kauro Tone (000). data envelopment analysis: A comprehensive text whit models, applications, references and DEA-solver software, Springer 000 Farrell, M.J.( 9), The measurement of productivity efficiency, Journal of Economics,-. http://www.ijhcs.com/index.php/ijhcs/index Page 88