Monetary and Banking Research Institute
Date:2/20/2019 3:12:25 PM   |   Code : 294230
Designing and Implementing a Comprehensive System of Productivity in Shahr Bank (Shahr Bank, 2017-2018)

Executive Summary

Two important steps in managing economic development of businesses are measuring the quality and quantity of implementation of operations and processes and promoting them. Literature in this area refers to broad concepts such as allocation, efficiency, productivity, and similar concepts. Part of the common questions of these domains are "Positive" analysis, which means with a given input size, the maximum output is generated and/or that the specified size of the output can be generated with less input. Another part of the questions is related to the "Normative" analysis, and how it affects the increase in products at a given level of input, or how to reduce the input required for a specific output level.

In the absence of output data, the production frontier is estimated and deterministic models of technical efficiency and the stochastic frontier model are proposed. It is not easy to estimate the effective production frontier and the method of data envelopment analysis is proposed for estimating the production frontier. This method is a linear programming that measures the ratio of total resources used to the total output of an organization. Comparing the value of ratios among different organizations leads to a comparative evaluation of productivity which means that the actual production frontier changes to the "best-practice frontier". The useful feature of this measure of productivity is that it does not depend on the price of the goods, and only the inputs and outputs are required.

The definitive models assume that any distance from the production frontier is related to inefficiency. Therefore, the ratio of production to optimal production is an efficiency indicator. Random models try to capture statistical errors and other random sources of distances from the production frontier. In these methods, the production frontier is estimated according to the most efficient method, and therefore, depending on the total productivity indicators, they are dependent on technology.

When a financial intermediary such as a bank focuses on measuring productivity and efficiency, a lot of complexities are created. A simple definition of the frontier of production facilities (whether accidental or otherwise) cannot be defined, because, there is not just one product, and service products constitute an important part of the products for a relatively complex organizational structure consisting of branches and counters and staff units.

The present plan measures the productivity of various parts of the Shahr Bank by relying on normative rating method and criterion-driven ranking. Faced with such a complicated system, a normative rating method is used to measure the productivity of Shahr Net counters and branches and a benchmark ranking method used to measure total bank productivity. Various topics such as geographic clustering, banking supervision, accounting standards, and risk management have been considered in this regard.

One of the most important features of this project is the functional methodology, so that for some areas of productivity measurement, platforms based on Excel software are designed and presented. Also, a relatively comprehensive list of performance measurement for different units (branches, counters, and nearly 20 staff units) is reported in this project. Finally, in the final phase, a fairly comprehensive program for productivity improvement is reported. The program includes measures to improve the transparency and measurement of processes on the one hand, and the use of information to improve operational metrics on the other hand. This phase also includes tips for drafting regulatory manuscripts for improving productivity.

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