Evaluating the resource management and proftability efciencies of US commercial banks from a dynamic network perspective

The central concept of strategic benchmarking is resource management efciency, which ultimately results in proftability. However, little is known about performance measurement from resource-based perspectives. This study uses the data envelop‑ ment analysis (DEA) model with a dynamic network structure to measure the resource management and proftability efciencies of 287 US commercial banks from 2010 to 2020. Furthermore, we provide frontier projections and incorporate fve variables, namely capital adequacy, asset quality, management quality, earning ability, and liquid‑ ity (i.e., the CAMEL ratings). The results revealed that the room for improvement in bank performance is 55.4%. In addition, we found that the CAMEL ratings of efcient banks are generally higher than those of inefcient banks, and management quality, earn‑ ings quality, and liquidity ratios positively contribute to bank performance. Moreover, big banks are generally more efcient than small banks. Overall, this study continues the current heated debate on performance measurement in the banking industry, with a particular focus on the DEA application to answer the fundamental ques‑ tion of why resource management efciency refects benchmark frms and provides insights into how efcient management of CAMEL ratings would help in improving their performance.