Efficiency Analysis of State-Owned Commercial Banks Using the Data Envelopment Analysis (DEA) Method

Abstract

This study aims to analyze the efficiency and development of state-owned commercial banks, where efficiency serves as an important parameter for measuring banking performance. The research employs a quantitative approach using Data Envelopment Analysis (DEA) with two models, namely Variable Returns to Scale (VRS) and Constant Returns to Scale (CRS). The sample consists of state-owned commercial banks during the 2019–2022 period. The input variables used include capital, Third Party Funds (DPK), and operational costs, while credit is used as the output variable. The analysis results indicate that based on the VRS model, state-owned commercial banks achieved efficiency in almost all years except 2019. Meanwhile, the CRS model shows that some banks achieved efficiency while others remained inefficient. Based on the average efficiency score during the study period, all banks were categorized as inefficient, although the efficiency values were relatively close to the optimal level at approximately 0.9. The differences between the VRS and CRS model results occur because the VRS model does not consider the influence of production scale, whereas the CRS model measures overall technical efficiency.