Incorporating the Quality of Output Measure to Evaluate Bank Operating Efficiency in Taiwan

This paper is to assess the operating efficiency of banks in Taiwan by means of data envelopment analysis (DEA) and incorporate the quality factor into output item in it. We place emphasis on presenting a quality-oriented operating efficiency and discuss the causes and effects of the operating efficiency scores. The estimated results show that the presence of the quality of output, operational ability and privatization can provide a positive influence on a bank's operating efficiency with a resultant positive impact on bank profits and customer satisfaction.