Efficiency evaluation in a retail bank

Research output: ThesisDoctoral ThesisCollection of Articles


This dissertation brings new insights to productive efficiency with an application-oriented approach. It evaluates the performance of bank branches during the turbulent times of 2007-2010. The evaluation uses multiple perspectives to view sales productivity and efficiency. The research project was conducted in collaboration with Helsinki OP Bank, which is a retail bank providing financial services to households and small and medium sized businesses in the Helsinki region. As 98 % of the transactional volumes are based upon customer self-services, the primary role of the bank branches is sales. Therefore, it is necessary to evaluate the sales performance of the branches. The research uses concepts of production theory and efficiency evaluation framework. It contributes to the eighty published studies of bank branch efficiency. It is one of the few studies that consider bank branches as sales units. The dissertation comprises four essays that take different perspectives on efficiency. Essay I compares the use of three variable reduction techniques to distinguish efficient units from inefficient ones. It brings insights into potential issues related to the use of these techniques. Essay II and Essay III are based upon value efficiency analysis which takes into account the preferences of the decision maker by using feasible benchmarks for the units under assessment. Essay II extends this approach to the evaluation of profit and return efficiency and in addition to that introduces and implements the use of high performing benchmarks that may not be in the feasible set. Essay III takes into account that the decision makers tend to choose existing units as benchmarks rather than for example their convex combinations. For this purpose the value efficiency analysis is extended to non-convex production possibility sets. Essay IV introduces an approach for intertemporal sales efficiency analysis that considers changing conditions and random disturbance. The use of multiple evaluations brings complementary insights to the development of the bank branch network. Results that are in line with other information sources strengthen the foundations for decisions and contradictions prompt caution in decision making. The bank has utilized the findings from the research collaboration, along with other sources of information, to improve the existing branch network and new branch establishment. The results have been also used to facilitate organizational learning. Even though the research has been conducted in a single case bank the insights regarding the efficiency evaluation and methodological contributions may be applied to banks and other sales-oriented organizations.
Translated title of the contributionTehokkuuden arviointi vähittäispankissa
Original languageEnglish
QualificationDoctor's degree
Awarding Institution
  • Aalto University
  • Kallio, Markku, Supervising Professor
  • Halme, Merja, Thesis Advisor
  • Korhonen, Pekka, Thesis Advisor
  • Kuosmanen, Timo, Thesis Advisor
Print ISBNs978-952-60-5589-3
Electronic ISBNs978-952-60-5590-9
Publication statusPublished - 2014
MoE publication typeG5 Doctoral dissertation (article)


  • banking
  • bank branches
  • sales performance
  • productive efficiency analysis
  • data envelopment analysis
  • value efficiency


Dive into the research topics of 'Efficiency evaluation in a retail bank'. Together they form a unique fingerprint.

Cite this