Efficiency improvement from multiple perspectives: An application to Japanese banking industry

The current study focuses on efficiency improvement for banking systems from multiple perspectives, which have different definitions of input/output about various attributes of a banking system. In this research we utilize data envelopment analysis (DEA) and Nash bargaining game (NBG) theory to improve inefficient banks in order to: (1) Make the inefficient bank be the state of Pareto Optimality for multiple perspectives, which can avoid discontentment of some perspectives. (2) Improve a bank by changing its attributes and provide various improving schemes for decision makers. A numerical case study of Japanese banks is also given to show the results of equilibrium solution from multiple perspectives.

► We propose a new DEA model incorporating NBG theory.
► The model improves the efficiency of banks from multiple perspectives.
► We examine changes of the efficiency of banks by the model.
► An appropriate improving scheme is selected to improve inefficient banks.