Quantifying Management’s Role in Bank Survival Using Data Envelopment Analysis (DEA): Case of Jamaica

This paper presents a new approach for quantifying bank’s management quality, using a data envelopment analysis (DEA) model that combines multiple inputs and outputs to compute a scalar measure of efficiency. This measure will seek to capture a fundamental and crucial element of a bank’s success, which is its management efficiency. The results show that, on average, differences in management quality scores exist between institutions that failed during the 1996-1998 financial sector meltdown relative to banks that survived. Additionally, during this period, the technical efficiency scores for foreign-owned banks were higher in comparison to scores for indigenous banks. In examining the post-crisis period: 2002-2008, it was found that the three largest commercial banks, on average, exhibited lower management efficiency scores in contrast to smaller commercial banks. JEL Classification: C51, C61, G21, D24