Mismanagement or mismeasurement? Pitfalls and protocols for DEA studies in the financial services sector

Dyson et al. [Dyson, R.G., Allen, R., Camanho, A.S., Podinovski, V.V., Sarrico, C.S., Shale, E.A., 2001. Pitfalls and protocols in DEA. European Journal of Operational Research 132, 245–259] suggest that the application of DEA presents a range of problems and they suggest that the systematic collection and reporting of these problems would significantly enhance DEA practice. It is widely accepted that DEA studies may be compromised by the problem of data heterogeneity. While this problem is expected in studies that cross national boundaries, it may also arise in studies for a single country. There can, for example, be significant market and regulatory differences between regions within a single country. Using a sample of Australian credit unions, this paper demonstrates the pitfalls and protocols of using DEA. It is intended that the guidelines provided in this study will enhance DEA practice in the financial services sector.