An Engineering Method to Measure the Bank Productivity Effect in Malaysia during 2001-2008

This paper aims to find out what happen to the bank productivity in Malaysia during 2001-2008, that is the period of internet technology waves. Data envelopment analysis (DEA) technique is used to calculate and decompose the Malmquist index of total factor productivity (TFP) growth into technical change and change in scale efficiency. The study found that the average TFP change is 1.4%, which is mainly due to the efficiency change of 3.3%. In addition, foreign banks were found to have higher efficiency level, followed by the local banks. Finally, the study found that the TFP does not always keep increasing as the technology improved. This suggest that bankers and officials should pay more attention to the strategies taken to best assimilate the effect of internet in banking sector, in order to further improve and sustain their performance in the long run. In addition to the insights obtained from the results, this research also proposed some simple engineering management technique to help analysts overcome the common problems which they usually faced during data analysis time.