Benchmarks of the efficiency of bank branches

The Bank of Cyprus commissioned a study of the efficiency penalties paid by its branches operating in different environments. Bank staff and faculty m embers of the University of Cyprus jointly developed a data envelopment ana lysis (DEA) model that was used (1) to provide benchmarks on the relative e fficiency of the bank's branches, (2) to provide guidelines for improvement to management, and (3) to isolate the effects of the environment on branch efficiency. The analysis showed that tourist branches were on average more efficient than urban branches during the peak tourist season. The DEA mode l was also used to benchmark seasonality effects, The analysis revealed bra nch resource underutilization, which depends on the season. The bank uses t he DEA model developed to establish policy guidelines and to provide suppor t for operational decisions toward performance improvement.