Input Cost of deposits, output total loans

Input cost of fixed assets, output non-interest/other operating income

Input cost of labour, outcome Total investments

This called financial intermediation approach. You may read Berger and Humphrey 1997, Berger and Mester 2003 for more approaches.

Dear Maan

Not wanting to take away the learning experience your professor is trying to achieve; here are some sources with answers to your question:

Article Corporate Control and Bank Efficiency

Article Privatization Matters: Bank Efficiency in Transition Countries

Article Bank Performance, Efficiency and Ownership in Transition Countries

Article A Comprehensive Analysis of the Effects of Risk Measures on ...

Article The Effects of Geographic Expansion on Bank Efficiency

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Thank you very much Sir Raymond A K Cox and Sir Salah U-Din

fixed assets, deposits and staff expenses are often used as inputs however the outputs may vary depend on the approach(value added, production or financial intermediation) you are using.

Sir @Ashiq Mohd Ilyas we really don't have any idea what approach we will use. Our statistician told us we will use Data envelopment analysis frontier. We search about it and now we are so confuse.

Maan Artogue Hope the paper titled" Application of Data Envelopment Analysis to Measure Cost, Revenue and Profit Efficiency "by Kristína Kočišová may guide you well.

Maan Artogue "A survey and analysis of the first 40 years of scholarly literature in DEA: 1978-2016" article may help you find DEA related journals and articles.

Ashiq Mohd Ilyas

Thank you sir

Sir Salah U-Din your suggested input and output was accepted by our professor, but he wants to identify which account title of banks where we can gather data on the said input and output. Can you help us?

Good, it helped you. Output: Total loans same account title, Investments also have same title, Non-interest income may come with same name or other income title.

Input: has longer detail just go to Berger and Humphrey 1997 or Berger and Mester 2003. They have provided all detail.

Matching the risks. Banks buy and sell money therefore maturity risk is very important. Maturity of their borrowings, deposits should much with the maturity of their loans. Another risk is the currency risk the foreign currency denominated borrowings should match with foreign currency loan receivables. Another risk is the interest rate risk borrowing rates should be lower that lending rates, because banks have additional responsibilities when they borrow money they have to keep some of their deposits in the form of cash and they pay for FDIC. They hike their borrowing costs therefore they have to reflect these costs on their lending rates. Any bank paying attention to these risks and lend money on the basis of good collateral and also make extra money from commissions for their customers` import export activities through their correspondent banks abroad. They can make good profits. Also banks should be conservative, should not take risks by playing around the risks mentioned above.

According to my experience, due to the complexity of the commercial banking business, efficiency is measurable through a series of ratios, which should be compared between similar peers in order to analyze the bank positioning. Regarding the analysis of the return on assets, assets must be weighed according to their risk.

Ratio cost / income

Default ratio

Asset profitability

Customer resources profitability

Profitability of resources out of balance

Clients and volumes per employee and bank office

Cross selling rates, dropout rates and customer retention, etc.

The other key reference is the Dyson et al article in EJOR from 2001.

As a starting point you may want to have a look at my DEA-bank efficiency literature review paper published in EJOR in 2010: http://www.sciencedirect.com/science/article/pii/S0377221709005438

I also suggest having a look at recent studies using network or 2 stage DEA which solve the problem of whether deposits constitute an input or output. You can find papers published in JBF and Omega.

For example, resolving the deposit dilemma with DEA (JBF, 2011): http://www.sciencedirect.com/science/article/pii/S0378426611001129

Thank you so much

For input:

savings deposits

issued securities

repos

credits received and

equity

available.

For output:

Credit

securities

financial affiliate

reverse repo

and

interbank money market

It is suitable to receive.

Best input is:

savings deposits and

issued securities.

Best output is:

Credit

securities.

thanks

Its debatable and depend on your underlying approach. You can see the following paper for some guidance.

Article Market Concentration, Risk-taking, and Efficiency of Commerc...

The basic data used to determine the effectiveness of commercial banks are included in the banks' financial statements. these data relate to the bank's involvement in specific active transactions, necessary to determine the quality of the loan portfolio, to determine the quality of credit, operational, liquidity, debt, operational risk management processes, etc. An IT risk analysis should be added to this. In addition, financial statements also include data to calculate the deposit security ratio, profitability of individual categories of assets and use of available financial resources. This type of data should be combined with individual categories of estimated risk levels measured in correlation to the involvement in individual active operations. However, in the case of the analysis of the investment bank's effectiveness, it should additionally include an analysis based on risk assessment models for investment in derivatives and other capital market instruments. In this regard, many banking procedures were previously unreliably carried out which generated very high levels of credit risks and caused huge financial losses, eg in the Lehman Brothers investment bank, bankruptcy of this bank and the beginning of the global financial crisis in mid-September 2008.

I invite you to the discussion

The issues of risk management in the context of determinants of the global financial crisis are described in the publications:

https://www.researchgate.net/publication/323244391_Determinants_of_credit_risk_management_in_the_context_of_the_development_of_the_derivatives_market_and_the_cyclical_conjuncture_economic_processes

I invite you to discussion and cooperation. Greetings

An interesting question. Considering current research problems important for science, I think that the question concerns particularly important issues. I believe that research on this topic should be continued. There was an interesting discussion. Greetings