Combining efficiency with ROA: indicator of future relative performance - South African banking groups
Bank financial performance and relative future financial performance are important issues to stakeholders like management, shareholders, investment analysts and portfolio managers. This paper provides evidence that bank financial performance expressed as return on assets (ROA) figures that are adjus...
| Main Authors: | , |
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| Format: | Journal Article |
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Virtus Interpress
2010
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| Online Access: | http://hdl.handle.net/20.500.11937/28882 |
| _version_ | 1848752655008006144 |
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| author | Cronje, Tom Beer, J. |
| author_facet | Cronje, Tom Beer, J. |
| author_sort | Cronje, Tom |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | Bank financial performance and relative future financial performance are important issues to stakeholders like management, shareholders, investment analysts and portfolio managers. This paper provides evidence that bank financial performance expressed as return on assets (ROA) figures that are adjusted according to relative income and expenditure efficiency provide fundamental measures of performance that have a causal link with future profits and can be utilised in estimating future financial performance. The methodology applied in this research consists of empirically investigating the annual changes in the ROAs of the nine listed South African Banking Groups over the period 2000 to 2008. The study consists of a two stage process. Data envelopment analysis (DEA) is conducted and resultant DEA scores are combined with the calculated ROAs of banks to provide efficiency adjusted ROA. The findings of this research paper shows that combining the CRS efficiency of bank groups with ROA provides a more reliable measure of future financial performance than just conventional ROA figures and efficiency figures. |
| first_indexed | 2025-11-14T08:12:04Z |
| format | Journal Article |
| id | curtin-20.500.11937-28882 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T08:12:04Z |
| publishDate | 2010 |
| publisher | Virtus Interpress |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-288822017-01-30T13:08:06Z Combining efficiency with ROA: indicator of future relative performance - South African banking groups Cronje, Tom Beer, J. income efficiency efficiency adjusted return on assets cost efficiency return on assets data envelopment analysis Bank financial performance Bank financial performance and relative future financial performance are important issues to stakeholders like management, shareholders, investment analysts and portfolio managers. This paper provides evidence that bank financial performance expressed as return on assets (ROA) figures that are adjusted according to relative income and expenditure efficiency provide fundamental measures of performance that have a causal link with future profits and can be utilised in estimating future financial performance. The methodology applied in this research consists of empirically investigating the annual changes in the ROAs of the nine listed South African Banking Groups over the period 2000 to 2008. The study consists of a two stage process. Data envelopment analysis (DEA) is conducted and resultant DEA scores are combined with the calculated ROAs of banks to provide efficiency adjusted ROA. The findings of this research paper shows that combining the CRS efficiency of bank groups with ROA provides a more reliable measure of future financial performance than just conventional ROA figures and efficiency figures. 2010 Journal Article http://hdl.handle.net/20.500.11937/28882 Virtus Interpress fulltext |
| spellingShingle | income efficiency efficiency adjusted return on assets cost efficiency return on assets data envelopment analysis Bank financial performance Cronje, Tom Beer, J. Combining efficiency with ROA: indicator of future relative performance - South African banking groups |
| title | Combining efficiency with ROA: indicator of future relative performance - South African banking groups |
| title_full | Combining efficiency with ROA: indicator of future relative performance - South African banking groups |
| title_fullStr | Combining efficiency with ROA: indicator of future relative performance - South African banking groups |
| title_full_unstemmed | Combining efficiency with ROA: indicator of future relative performance - South African banking groups |
| title_short | Combining efficiency with ROA: indicator of future relative performance - South African banking groups |
| title_sort | combining efficiency with roa: indicator of future relative performance - south african banking groups |
| topic | income efficiency efficiency adjusted return on assets cost efficiency return on assets data envelopment analysis Bank financial performance |
| url | http://hdl.handle.net/20.500.11937/28882 |