General and multiplicative non-parametric models with interval ratio data: application to the banking industry

Abstract

The empirical literature has tried to propose relevant data envelopment analysis (DEA) models to evaluate the efficiency level of the decision-making unit (DMU) in the presence of interval ratio data; however, the use of variable production frontier in the evaluation suffers from a number of limitations. The current study fills in the gap in the previous literature by proposing relevant DEA models based on interval arithmetic, through which the shortcomings of the previous existing studies have been overcome. The findings show that extra variable changes are not needed by the proposed model and a fixed, unified production frontier can be used to measure the DMUs’ efficiency with interval data. The potential application of the proposed model is illustrated through a numerical example in the banking industry.