Factor Selection Issues in Bank Branch Performance

5.9. Summary

This chapter has examined the embedding of expert knowledge within the DEA model structure. The principal form that such information will take is a classification of a subset of DMUs into two or more groups. We examine only the case of two groups or classes here. It has been demonstrated that considering such information can result in DEA scores that are more in line with management’s view of performance.

Modifications of this idea can be executed, such as the imposition of sign restrictions on factor multipliers, arising from locking in such factors as either inputs/outputs. Finally, the DEA analysis can be further enhanced by requiring that those DMUs classified by management, obey that classification to the extent possible within the wider DEA analysis.