Evaluation of the Performance of Post Bank of Iran (The Branches of Tehran Province) Using the Data Envelopment Analysis (DEA)
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Special Issue INTERNATIONAL JOURNAL OF HUMANITIES AND December 2015 CULTURAL STUDIES ISSN 2356-5926 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 2013 and 2014 as following: 23 branches have been efficient in both years. 2 branches have been inefficient in both years. 4 branches have been efficient in 2013 but inefficient in 2014. 13 branches have been inefficient in 2013 but efficient in 2014. The extent of efficiency of the branches in 2013 was 62.7 and in 2014, it was 83.7 which indicates that the branches of Tehran province have had a high efficiency in 2014, 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= 0.05), so, the rank of branches is not the same in each of these 4 variables. Keywords: Post Bank of Iran, Data Envelopment Analysis, evaluation, performance. http://www.ijhcs.com/index.php/ijhcs/index Page 1768 Special Issue INTERNATIONAL JOURNAL OF HUMANITIES AND December 2015 CULTURAL STUDIES ISSN 2356-5926 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: 1. navigation and management of the dispersed funds 2. controlling the inflation pressure in the country’s economy 3. 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: 1. Identifying factors affecting the efficiency of the inefficient units (selecting appropriate inputs and outputs regarding too the purposes of the organization) 2. determining the efficient and inefficient branches 3. measuring the efficiency of each of the branches of Post Bank of Iran (branches in Tehran province) 4. comparing and ranking the branches in terms of each of the outputs Research’s Model: Specify the Input Efficiency Ranking DEA the Units Output 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 1769 Special Issue INTERNATIONAL JOURNAL OF HUMANITIES AND December 2015 CULTURAL STUDIES ISSN 2356-5926 1. the branches of Post Bank of Iran in Tehran province are different in terms of efficiency in the aspect of deposits. 2. the branches of Post Bank of Iran in Tehran province are different in terms of efficiency in the aspect of facilities. 3. the branches of Post Bank of Iran in Tehran province are different in terms of efficiency in the aspect of services. 4. 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: 1. how much is each of the branches efficient? 2. how is the ranking of the efficiency of the branches? 3. what are the efficient and inefficient branches? 4. 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, 2004, 65). 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, 2004, 43). Performance Assessment Purposes: Performance assessment purposes have been designed in six major goals: 1. putting the strategies and activities in one direction 2. controlling operations 3. management and interaction with the stakeholders 4. accountability 5. 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: 1. Technical efficiency, 2. Professional efficiency, 3. Structural efficiency, 4. Scale efficiency, and 5. Economic efficiency Methods of Measuring Efficiency: http://www.ijhcs.com/index.php/ijhcs/index Page 1770 Special Issue INTERNATIONAL JOURNAL OF HUMANITIES AND December 2015 CULTURAL STUDIES ISSN 2356-5926 1. 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, 2004, 47). 2. 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, 2008, 67). 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 (43 branches), all of the statistical society are used and no sampling is done. - the time territory of this study is the years of 2013 and 2014 (1393 and 1394 Solar Hijri) and the time of conducting it is from March 2015 to November 2015. - 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. 1. 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. 2. extraction of the input and output rates from the bank’s statements 3. the relative efficiency of the branches has been determined by using DEA model and DEA SOLVER software. The software used for solving the model