A NONPARAMETRIC ANALYSIS OF INVESTMENT BANKS' EFFICIENCY IN THE CURRENT GLOBAL CRISIS
The purpose of this study is to assess to what extent the business model practiced by investment banks, before the beginning of the financial crisis, has influenced their performance indicators, and especially those who express shareholders' satisfaction. To this end, we have applied a nonparam...
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| Format: | Article |
| Language: | English |
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Nicolae Titulescu University Publishing House
2011-04-01
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| Series: | Challenges of the Knowledge Society |
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| Online Access: | http://cks.univnt.ro/uploads/cks_2011_articles/index.php?dir=02_economy%2F&download=cks_2011_economy_art_058.pdf |
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| author | TEODORA CRISTINA BARBU NICOLAE DARDAC IUSTINA ALINA BOITAN |
| author_facet | TEODORA CRISTINA BARBU NICOLAE DARDAC IUSTINA ALINA BOITAN |
| author_sort | TEODORA CRISTINA BARBU |
| collection | DOAJ |
| description | The purpose of this study is to assess to what extent the business model practiced by investment banks, before the beginning of the financial crisis, has influenced their performance indicators, and especially those who express shareholders' satisfaction. To this end, we have applied a nonparametric method, called Data Envelopment Analysis, which allows obtaining the efficiency scores for each financial institution considered. The sample included two pure investment banks, Lehman Brothers and Goldman Sachs, and seven international financial groups carrying out investment banking activities. The model tested assumed the maximization of selected output variables (ROE and the dividend distributed), by considering several input variables, meant to summarize the risk profile and costs arising from implementing a particular business model. The results obtained, in the form of high inefficiency scores, indicate that the business model of investment banks was not better performing than that applied by financial groups, because it failed to ensure a balance between ownership compensation and sustainable expansion of financial activity. |
| format | Article |
| id | doaj-art-b2a28fc310cf4daabd59ef824ee11b83 |
| institution | Kabale University |
| issn | 2068-7796 |
| language | English |
| publishDate | 2011-04-01 |
| publisher | Nicolae Titulescu University Publishing House |
| record_format | Article |
| series | Challenges of the Knowledge Society |
| spelling | doaj-art-b2a28fc310cf4daabd59ef824ee11b832025-01-02T08:55:05ZengNicolae Titulescu University Publishing HouseChallenges of the Knowledge Society2068-77962011-04-011-13791389A NONPARAMETRIC ANALYSIS OF INVESTMENT BANKS' EFFICIENCY IN THE CURRENT GLOBAL CRISISTEODORA CRISTINA BARBUNICOLAE DARDACIUSTINA ALINA BOITANThe purpose of this study is to assess to what extent the business model practiced by investment banks, before the beginning of the financial crisis, has influenced their performance indicators, and especially those who express shareholders' satisfaction. To this end, we have applied a nonparametric method, called Data Envelopment Analysis, which allows obtaining the efficiency scores for each financial institution considered. The sample included two pure investment banks, Lehman Brothers and Goldman Sachs, and seven international financial groups carrying out investment banking activities. The model tested assumed the maximization of selected output variables (ROE and the dividend distributed), by considering several input variables, meant to summarize the risk profile and costs arising from implementing a particular business model. The results obtained, in the form of high inefficiency scores, indicate that the business model of investment banks was not better performing than that applied by financial groups, because it failed to ensure a balance between ownership compensation and sustainable expansion of financial activity.http://cks.univnt.ro/uploads/cks_2011_articles/index.php?dir=02_economy%2F&download=cks_2011_economy_art_058.pdfinvestment banksbusiness modeldata envelopment analysisefficiency score |
| spellingShingle | TEODORA CRISTINA BARBU NICOLAE DARDAC IUSTINA ALINA BOITAN A NONPARAMETRIC ANALYSIS OF INVESTMENT BANKS' EFFICIENCY IN THE CURRENT GLOBAL CRISIS Challenges of the Knowledge Society investment banks business model data envelopment analysis efficiency score |
| title | A NONPARAMETRIC ANALYSIS OF INVESTMENT BANKS' EFFICIENCY IN THE CURRENT GLOBAL CRISIS |
| title_full | A NONPARAMETRIC ANALYSIS OF INVESTMENT BANKS' EFFICIENCY IN THE CURRENT GLOBAL CRISIS |
| title_fullStr | A NONPARAMETRIC ANALYSIS OF INVESTMENT BANKS' EFFICIENCY IN THE CURRENT GLOBAL CRISIS |
| title_full_unstemmed | A NONPARAMETRIC ANALYSIS OF INVESTMENT BANKS' EFFICIENCY IN THE CURRENT GLOBAL CRISIS |
| title_short | A NONPARAMETRIC ANALYSIS OF INVESTMENT BANKS' EFFICIENCY IN THE CURRENT GLOBAL CRISIS |
| title_sort | nonparametric analysis of investment banks efficiency in the current global crisis |
| topic | investment banks business model data envelopment analysis efficiency score |
| url | http://cks.univnt.ro/uploads/cks_2011_articles/index.php?dir=02_economy%2F&download=cks_2011_economy_art_058.pdf |
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