An earlier version of this work has been presented by the first author as an invited talk at INFORM 2010, Austin. The second author's work was supported by the University of Chicago Booth School Of Business.
Serial Chain Merger Evaluation Model and Application to Mortgage Banking*
Article first published online: 14 FEB 2012
© 2012 The Authors Decision Sciences Journal © 2012 Decision Sciences Institute
Volume 43, Issue 1, pages 5–36, February 2012
How to Cite
Wu, D. D. and Birge, J. R. (2012), Serial Chain Merger Evaluation Model and Application to Mortgage Banking. Decision Sciences, 43: 5–36. doi: 10.1111/j.1540-5915.2011.00340.x
- Issue published online: 14 FEB 2012
- Article first published online: 14 FEB 2012
- [Submitted: July 23, 2010. Revisions received: January 3, 2011; April 20, 2011; June 23, 2011. Accepted: June 24, 2011.]
- Banking Operations;
- Data Envelopment Analysis;
- and Serial Chain
Mortgage banking operations can be viewed from a supply chain perspective, where the primary and secondary markets are upstream and downstream chain members, respectively. This article describes a serial-chain-merger data envelopment analysis (DEA) model to assess potential gains from the merger of different chain operations. We show that in our framework the merger of different chains with many sub-chains is efficient within the DEA paradigm if and only if the mergers of sub-chain members are all efficient. A case study of a banking operations merger is conducted to illustrate and validate the proposed approach. The computations show that merger of operations can result in overall efficiency improvement in the banking industry if the merger preserves the features assumed in the DEA model.