Business

* We used cost related input variables in the merged GN-bank. These included; SQM(square meters), LBR HRS(labor hours) and Miscost(miscellaneous costs, not including salary and premises so asnot to double count it).SQM, this is taken as an important cost factor because a bank operating in a big office pays more rent compared to a bank operating in a smaller office. LBR HRS, it makes up the bank’s largest cost. And Miscost is made up of maintenance cost etc, which greatly affects a bank’s expenses.

We chose output variables. We used the number of business customers and number of preferential customers. Number of private individual customers. These are the bank’s largest revenue sources

* We then wanted to test the efficiency in bank G-bank’s stated goals. Focus being on The inputs which were the same as the merged GN-bank’s. However, for the output, G focused on business customers and preferential customers and on the number of credit contacts of more than 7MSEK. The outputs reflect the bank’s focus on pref. customers with savings amounting to a minimum of Ksek 100 and on small and medium-sized companies.

* We then tested the efficiency in N-bank’s stated goals. Same inputs were used in N bank as the merged GN-bank, however their output was more focused on private customers and number of transactions that had a period of over 6 months

To get the branch efficiency ranking we ran the DEA program. 277 branches of the deciles, having over 80% scale efficiency were then plotted. This shows that 52% of GN-bank’s branches are scale efficient. 30% of the branches that had below 80& efficiency(that is 23% of the branches), had a decreasing return to scale and should seek ways to reduce the incurred cost. 70% of the branches should find ways of increasing investment to increase efficiency since they had an increasing return to scale. This shows that there should be an increase in the number of potential investments for the new bank in the next couple of years...