A decision model to predict profitability using revised Thompson-Thrall profit ratios in DEA with an application to South Asian banks (Q646778)

Summary: Many researchers in the past have addressed the issue of profitability of banks from different perspectives using financial ratios and decision models. \textit{R. G. Thompson} et al. [Adv. Comput. Econ. 6, 79--90 (1997; Zbl 1056.91537)] introduced linked-cone (LC) profit ratios with assurance regions (AR) in data envelopment analysis. In this paper, we revise LC-AR and show a contrast between Thompson-Thrall's and revised profit ratios. We propose a decision model to classify banks as profit-makers, loss-makers or neither, when `market prices' that form AR are not available and hence LC-AR profit ratios do not exist. We demonstrate how this method works for a set of South Asian banks.