Operational Efficiency Performance Research Articles

Operational efficiency in the presence of undesirable byproducts: an analysis of Indian banking sector under traditional and market-based banking framework

PurposeIn the backdrop of an increase in market-based banking activities, this paper aims to study operational efficiency of Indian banking sector during 2009–2010 through 2017–2018 considering Capital Gain and Gain from Forex Market (as desirable outputs) and Slippage (as undesirable byproducts) simultaneously, along with Advances – a desirable output considered in the traditional banking performance assessment literature. This enables to have an assessment of performance (as captured by the measured efficiency scores) of Indian Banks following an alternative viewpoint about the banking activities. The authors also explain such efficiency scores in terms of bank-specific factors, banking industry competition scenario and interest rate channel.Design/methodology/approachUsing data envelopment analysis (DEA) method, the authors estimate six alternatives but interlinked operational efficiency scores (TES) of the Indian domestic commercial banks. In the second stage, they explain such TES in terms of bank-specific factors, banking industry competition scenario and interest rate channel.FindingsThe authors observe that the private sector banks as a group outperform those under public ownership. Moreover, although the private sector banks could maintain somewhat consistency in their operational efficiency performance over the sample period, public sector banks clearly show a declining tendency. The second stage econometric estimation results show that the priority sector lending has a negative effect on efficiency. Interestingly, the authors get varying results for the relationship between maturity and efficiency score depending on banks’ strategies on stressed assets management. Furthermore, the analyses result that banks are not so efficient in managing relatively larger-volume loans. It is also observed that banks’ efficiency positively depends on the Credit-to-Deposit (CD) ratio. It is found that the overall operational efficiency of the banks to manage their credit risk portfolio improves with a reduction in the lending rate (LR). However, the interaction of lending activities and capital market shows that with the increase in LR, corporate borrowers may switch to capital market to explore for desired funds, which may induce the banking sector to investment in capital markets and create a positive market sentiment.Originality/valueLiterature, although scanty, is there dealing stressed assets of a bank as some undesirable byproducts of its operational and business activities. However, such literature mostly done within the traditional framework of banking business activities and modern market-based business activities are almost absent in the literature. The authors have done it in the present study.

Usage of Machine Learning Algorithm Models to Predict Operational Efficiency Performance of Selected Banking Sectors of India

—It was an attempt to predict the impact of NPAs in the selected public (SBI, BoI, BoB, BoM, CBoI, AB, CB, AlB,) and private (AxB, ICB, HDFCB and KB) banking sectors from 2008 to 2019. The data was also used to predict operational performance efficiency of these banking sectors after extracting through machine learning (ML) algorithm models and statistical interpretation of prediction accuracy by using WEKA tool. We used different models viz. NaiveBayes (NB), BayesNet (BN), logistic regression (LgR), Sequential minimal optimization of Support Vector Machine regression (SMOreg), Linear Logistic Regression (SL), Classification via Regression (CR), LogitBoost (LB); Logistic Model Tree (LMT), Random Forest & Random tree (RF & RT), Pruned & unpruned decision tree C4 (J48), and Class implementing minimal cost-complexity pruning (Cart) related to 15 attributes viz. GNPA, NNPA, GDP, CPI, PSL, TL, STA, GDP-1, RR, CPI-1, TE, TP and USTA as numeric as well as Banks, Year, GNPA>6, and GNPA>7, as nominal categories of dataset where overall performance accuracy was determined. The algorithm model classification predicted the highest values were for LB (78.47%) and Cart (74.30%) followed by J48 (73.61%), CR (72.91%) and LMT (69.44%) and lowest value in SMO (34.72%) as per 10-fold cross validation test. Additionally, these predicted results may have valuable implications for Indian banking sectors. We evaluated the operational efficiency as cumulative performance for 12 banking sectors as per assumed cut off values of GNPA. It may be varied with other independent variables like credit risk parameters, etc. It is suggested in future to study with parameters of deposit collection and investment to determine credit risk of these banking sectors. Keywords—Indian banking sectors, Machine learning models, Non-performing assets, Operational efficiency, WEKA tool

The impact of supply chain relationship configurations on supplier performance: investigating buyer–supplier relations in the aerospace industry

Purpose A supplier may sell not only to one buyer (sole relationship configuration) but also to the buyers competitors (shared relationship configuration) for a specific product category. This study examines the performance implications when suppliers establish shared relationships with the buyer’s competitors.Design/methodology/approach Secondary data are used to test hypotheses relating a supplier’s relationship configurations to its operational performance. A seemingly unrelated regression approach (SUR) is applied to analyze the data, followed by endogeneity checks of the empirical findings.Findings The study shows that suppliers with less-shared ties with buying firms’ competitors exhibit superior inventory efficiency and asset turnover. Thus, suppliers can improve operational efficiency by creating relatively exclusive, deep and trust-based relations instead of more extensively shared and shallower relationships.Research limitations/implications Based on agency theory as a theoretical lens and aerospace industry data, this research contributes by addressing the supplier’s perspective and linking its operational efficiency performance with its chosen supply relationship configuration.Practical implications Suppliers need to understand the performance implications of choosing relatively exclusive relationships versus shared relationships with buying firms. The research provides new insights for managers and can guide their supply chain decision-making.Originality/value Little is known about how a supplier’s relationship configurations can elevate, or impair, its operational efficiency. While conventional wisdom holds that suppliers should focus on multiple avenues of revenue growth by selling to buyers’ competitors, this study demonstrates that more sales to a buying firm’s rivals might, in fact, reduce a supplier’s efficiency.

EVALUATION OF THE STRATEGIES FOR AN INDUSTRY DEVELOPMENT BY THE MATRIX ANALYSIS METHOD

Under the conditions of more open economies, deepening globalization, toughening of international competition, as well as developing of the forth industrial revolution the support for sustainable growth of an industry comprises the creation of sustainable customer value chains in the industry. A comprehensive analysis of industry’s actors shall be oriented towards resource sufficiency conditions, financial risks evaluation and operational efficiency performance. This analysis is an integrate part of an elaboration process of a strategy for sustainable development of an industry. The matrix of financial strategies is appropriate tool to assess the balance of resource sufficiency and investment opportunities, as well of risks for the sustainable growth. The matrix analysis of JSC “Aviacompany “Ukraine International Airlines” set the balance of performance results in financial and operational activities in the period of 2015-2018. The high level of operational performance of the enterprise led to the increase in financial potential, but simultaneously revealed the limits of the current growth strategy. The company needs to switch from an organic development strategy to an inorganic one.

Determinants of operational efficiency in the oil and gas sector

PurposeThere is limited research that indicates the relation between knowledge management practices (KMPs), organizational culture (OC) and operational efficiency performance (OE) by using Balanced scorecards (BSC) specifically in oil and gas sector. This relationship is not yet acknowledged through empirical tests. The purpose of this paper is to fill this gap by providing a better understanding of that relationship and its importance with regard to business outcomes.Design/methodology/approachIn order to examine the relationship between OC and OE, this research takes a BSC perspective with the mediating impact of KMPs. Three hypotheses were developed using literature review and tested through the application of confirmatory factor analysis in structural equation modeling. Altogether, 568 valid responses were collected from one of the biggest oil and gas companies in the UAE.FindingsAll KMPs were found to have significant relationship with OE and OC. Also, KMPs mediate the relationship between OC and OE. In addition, the results show that the standardized coefficients of these paths and the loadings of the indicators on their factors are significant. Pearson’s correlations indicate strong evidences of the joint impact of OC and KM practices on OE, with a possible mediator impact of KM practices on OE.Research limitations/implicationsOne of research limitations is the type of organization. Future research may include other industries such as manufacturing and construction. Only the operational variable is evaluated and there is no consideration of other dimensions such as leadership type, organizational structure and technology.Originality/valueThis paper is the first in the UAE and the region to examine the relationship between OC and KMPs by considering OE from a BSC perspective with the mediating impact of KMPs.

Effect of Mobile Credit on Operational Efficiency in Commercial Banks in Kenya

This study sought to establish the effect of mobile credit on operational efficiency in commercial banks in Kenya. The study utilized primary as well as secondary data on access to mobile credit and its effects on the performance of the organization. A questionnaire was the primary data collection tool and composed of open ended and closed ended questions. Data collected was analyzed using multiple linear regression analysis at a 95% confidence interval. Analyzed data was presented using tables and figures for ease of interpretation. Operational efficiency is the goal of any manager in a customer service driven sector. Some of the strategies to achieve operational efficiency include managerial behavior change, promoting operational optimization and use of technology. Mobile credit introduction improved operational efficiency in commercial banks. Mobile credit introduction enhanced operational efficiency in loans collection, returns on shareholders. The operational efficiency performance indicators utilized in this study were: return on assets, earnings per share and proportion of non-performing loans. On the other hand, proportion of non-performing loans declined after the introduction of mobile credit indicating increased operational efficiency in debt collection. The introduction of mobile credit significantly enhanced organization efficiency as measured by metrics such by brand image building, ability to adapt to market changes and perceptions of reliability in the customer’s mind. Mobile credit introduction improved operational efficiency in commercial banks. Mobile credit introduction enhanced operational efficiency in loans collection, returns on shareholders. Overall, it has been accepted that the use of technology is one of the major strategies used to enhance operational efficiency. The findings of this study propose that the use of mobile credit has enhanced debt collection efficiency and revenue generation efficiency.

Interface Design Optimization by an Improved Operating Model for College Students

A method was proposed in this study for assessing the interface operating efficiency of a remote control. The operating efficiency of a product interface can be determined by the proposed approach in which the related dimensions of human palms were measured. The reachable range (blue zone) and the most comfortable range (green zone) were investigated when a user used a single hand (right hand) to operate the remote controls. After that, new remote control designs were created based on the measurement results and the operating efficiency of commercially available remote controls were determined for comparison. The operating efficiency is determined by calculating the overall distance of finger movements when manipulating the buttons and the overall operation time was recorded. The subjects who joined the body measurements and performed the experiments are right-hander Asian college students between the ages of 22 and 28. After further optimization, the reachable range became more average during one-handed operations and those frequently used keys were included into the comfortable range. The resulting operating efficiency performance is higher than commercially available products. The results serve as a good reference for detailed modifications of the products or for the decision making of design proposals.

The relative efficiency and financial risk assessment of shipping companies

Since shipping companies are highly competitive, we ask whether financial risk assessment tools impact company performance and, therefore competitiveness and efficiency. Stochastic Frontier Analysis (SFA) is used in the evaluation. Based on distinct features of the risk-return relationship, three cargo segments in the shipping industry are studied—dry bulk, liquid bulk, and containerized cargo. The influence of the risk assessment indicators on market and operational efficiency is subsequently determined using a panel regression to determine whether different asset allocation and risk management techniques improve the performance of shipping companies. In this analysis, 79 international shipping companies listed in Bloomberg Shipping Indices are included in the data collected from Thomson One for the period of 2001–2010. Efficiency estimation from the SFA shows that containerized cargo firms have better performance in both market and operating efficiencies. Operating efficiency performance is achieved by lowering liquidity. Market efficiency is improved by well-managed leverage level.

Measuring airports’ operating efficiency: a summary of the 2003 ATRS global airport benchmarking report

Abstract This paper provides a partial summary of the 2003 ATRS (Air Transport Research Society) Global Airport Benchmarking Report which uses the annual data for 2000–2001. The objective of the ATRS benchmarking report is to measure and compare the performance of several important aspects of airport management and operation: productivity and efficiency, unit costs and cost competitiveness, financial results. The report also examines the relationships between various performance measures and airport characteristics in order to better understand the observed differences in airport performance. This particular paper extracted from the benchmarking report focuses on measuring and comparing operating efficiency performance of the world’s major airports. In particular, the paper presents the results on the airports’ Variable Factor Productivities (VFP) after removing the effects of the variables beyond managerial control. In the process, it identifies the effects of various factors influencing airport’s VFP, and computes a ’residual’ VFP index as an indicator for airports’ operations efficiency.