Selection of Input-Output Variables in Data Envelopment Analysis - Indian Commercial Banks

Data Envelopment analysis is a nonparametric method used to evaluate the performance of profit and non-profit organizations. It assumes that the input and output variables are known a priori. In each environment, there exists a huge number of input and output variables, and all the variables will serve as either input or output variable. If there exist a large number of input and output variables, the discriminatory power of the DEA will reduce. To overcome this difficulty one may need to reduce the input and output variables using appropriate scientific methods. This study proposed a new stepwise method to reduce the data set with the help of non-parametric tests. The outputs are impressive, and this proposed method is approximately suitable in reducing the insignificant input and output variables and also tried to minimize the wastage of the input variables about 2% for the selected study.