Exploring the Role of Physical Space Facilities of Bank Branches in Malmquist Productivity Growth using DEA

Increased productivity and efficiency are the most important sources of economic development. Pure efficiency, economies of scale, technology, rules and regulations are recent known factors affecting the Malmquist productivity index. This article focuses on the role of physical space facilities of bank branches as a factor affecting the decomposition of Malmquist productivity index. First, we will introduce a new model that applies weight restrictions in basic DEA models for constant returns to scale technologies. The weight restrictions are in the form of assurance region type I to enhance the distinctiveness power of the basic data envelopment analysis models. Then develop an extended Malmquist Index using the proposed model. It provides a new decomposition that explains the role of bank branches facilities in increasing or decreasing productivity. The validity of the proposed method is confirmed by actual data from 74 commercial bank branches in the two periods 2017 and 2018, and the results of the traditional and extended Malmquist indexes are analyzed.