A study of efficiency evaluation in Taiwan’s banks

The main contribution of this paper is empirical in nature. We use data envelopment analysis to evaluate the relative efficiency of 34 commercial banks in Taiwan. Fifteen banks are identified as efficient ones and they are divided into four sub‐groups. Conversely, 19 banks are attributed as inefficient ones and the slack analysis are followed. The inefficient banks can effectively promote resource utilization efficiency by better handling their labour and capital operating efficiency and enlarging bank investment function. In addition, we compare the data envelopment analysis results to the financial ratios and show that a consistent effect cannot be obtained. This is to say that we cannot derive which bank has a higher performance from financial ratio analysis only.