MCB-DEA: A modified approach for benchmarking

Review of existing literature on the study suggests that though non-parametric technique Data envelopment analysis (DEA) can be used to arrive at benchmarks but it has its own limitations, like non-inherent benchmarks, more than one benchmark and different benchmarks for each year, which makes it difficult for an inefficient bank to decide that which benchmark should be followed for feasible improvement. Thus, there is a need to identify a new method which can help in ascertaining benchmarks based on multi period analysis for improving efficiency. The present study endeavours to propose a model which has been named as MCB-DEA model. The same has been illustrated using a data base of sixteen years for twenty five public sector banks operating in India. It was found that the suggested model helps in identifying nearest benchmark, falling in same cluster so as to gradually improve efficiency.