Resource, Service Quality and Performance Triad: A Framework for Measuring Efficiency of Banking Services

Journal of the Operational Research Society, Vol. 54, No. 7, pp. 723-735, 2003

13 Pages Posted: 16 Oct 2012

See all articles by Avinandan Mukherjee

Avinandan Mukherjee

Clayton State University - University System of Georgia; Montclair State University - School of Business; Rutgers Business School

Prithwiraj Nath

University of East Anglia (UEA) - Norwich Business School

Manabendra Nath Pal

Indian Institute of Management (IIM), Calcutta

Date Written: 2003

Abstract

In this paper, we present the development of a theoretical framework for measuring the efficiency of banking services taking into account physical and human resources, service quality and performance. Expenditures on quality improvement efforts and the impact of service quality on financial outcomes have long intrigued researchers. Banks have traditionally focused on how to transform their physical resources to generate financial performance, and they inadvertently ignored the mediating intangible factor of service quality. A theoretical framework on the optimization triad of resource, service quality and performance is proposed here, thereby linking the marketing variables to the financial metrics. A measure for the return on quality is developed as the ratio of the potential improvements in financial performance by enhancement of service quality to the observed performance figures. Empirical results obtained from a study of 27 Indian public sector banks and their customers allow us to measure the impact of service quality on financial performance, optimal level of service quality that can be generated using existing resources and the opportunity cost for sub-optimal service delivery. Banks delivering better service are shown to have better transformation of resource to performance using superior service delivery as the medium. Our results confirm the linkage between resource, service quality and performance for services.

Keywords: data envelopment analysis, banking, service quality, efficiency, performance

Suggested Citation

Mukherjee, Avinandan and Nath, Prithwiraj and Pal, Manabendra Nath, Resource, Service Quality and Performance Triad: A Framework for Measuring Efficiency of Banking Services (2003). Journal of the Operational Research Society, Vol. 54, No. 7, pp. 723-735, 2003. Available at SSRN: https://ssrn.com/abstract=2162635

Avinandan Mukherjee (Contact Author)

Clayton State University - University System of Georgia ( email )

College of Business
2000 Clayton State Boulevard
Morrow, GA Metro Atlanta Area 30260
United States
(678) 466-4516 (Phone)
(678) 466-4599 (Fax)

Montclair State University - School of Business ( email )

Partridge Hall
School of Business
Montclair, NJ New Jersey 07043
United States

Rutgers Business School ( email )

Janice H. Levin Bldg., Room 121
94 Rockafeller Road
Piscataway, NJ 08854-8054
United States

Prithwiraj Nath

University of East Anglia (UEA) - Norwich Business School

Norwich
NR4 7TJ
United Kingdom

Manabendra Nath Pal

Indian Institute of Management (IIM), Calcutta ( email )

E-110, NTB
Joka, Diamond Harbour Road
Calcutta, West Bengal 700104
India

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