US FEDERAL RESERVE: One of the Fed's approaches is to look at: (i) cost efficiency; (ii) ROA; and the ratio of non-interest assets / total assets. However, in the field, the measurement of bank performance or bank's efficiency has disagreements over what should be use as the output.
Berger & Humphrey (see attached) point out that there are at least three approaches to measuring the bank's output:
1. Assets approach
2. Cost approach
3. Value-added approach
See comments at the end of this article, the co-authors also have different perspectives on the same issue. Once we have the output, then go to input. How does one measure input of bank? Define costs for bank operations and from there we look into efficiency calculation. Use the bank's financial statements as the data source. For banks that are traded in the stock exchanges, these data could be downloaded from the bank's listing page.
POINTS TO CONSIDER: The researcher has to look at the local market of economy where the banks are located in order to appreciate the local market and regulatory conditions when assessing bank's performance. See Kablan article.
Data can also be downloaded from the database BankScope (https://bankscope.bvdinfo.com/version-2015325/home.serv?product=scope2006), requires the payment of subscription and coverage is different in different countries.
Look at my attempt to measure companies' conduct/behavior/performance in terms of innovations. Look at also a paper on banks' innovations. You can combine both approaches.
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