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JOURNAL OF APPLIED BUSINESS AND ECONOMICS
Measuring Performance of Banks: An Assessment
Author(s): Jacob A. Bikker
Citation: Jacob A. Bikker, (2010) "Measuring Performance of Banks: An Assessment," Journal of Applied Business and Economics, Vol. 11, Iss. 4, pp.141 - 159
Article Type: Research paper
Publisher: North American Business Press
Abstract:
Adequate performance of financial institutions is of crucial importance to their customers. Prices and
quality of their products are determined by efficiency and competition. Since efficiency and competition
cannot be observed directly, various indirect measures in the form of simple indicators or complex
models have been devised and used both in theory and in practice. This article demonstrates that
measuring the performance of banks is hard and that indicators differ strongly in quality. It investigates
which methods are to be preferred and how by combining certain indicators stronger measures may be
developed. These measures are subjected to a predictive validity test.
