Tyrone T. Lin

Application of DEA in analyzing a bank's operating performance

This article takes 117 branches of a certain bank in Taiwan in 2006 as the research subject and introduces data envelopment analysis (DEA) to evaluate the operating performances of business units of this bank to provide the reference for a banks managers in determining operation strategies. The result indicates that, in overall technical efficiency, the case bank has many inefficient branches distinctly; the average overall technical efficiency of branches is 54.8% and the average pure technical efficiency of branches is 67%, which is probably because of lower loan-to-deposit ratio, leading to excessive input waste. The average scale efficiency of the case bank during the sample period is 82%. The ratio of resource waste due to technical inefficiency is 45.2%, of which 55.03% is due to pure technical inefficiency.

An analysis of purchase intentions toward organic food on health consciousness and food safety with/under structural equation modeling

Purpose – The purpose of this paper is to investigate the influences of natural content, food safety concern, health consciousness, and subjective knowledge on attitudes towards organic food and purchase intentions. Design/methodology/approach – Samples are collected in Taiwan from April to May 2014 with a total of 252 returned effective questionnaires. The data are analyzed by structural equation modeling. Findings – The results show that food safety concern and subjective knowledge have a significantly positive impact on attitudes towards organic food and purchase intentions, and natural content has a significantly positive effect on attitudes towards organic food. Moreover, it also shows that health consciousness and attitudes towards organic food have a significantly positive effect on purchase intentions. This study has found that subjective knowledge of organic food, health consciousness, and food safety concern are important factors impacting organic food purchase intentions. Practical implications...

Applying the maximum NPV rule with discounted/growth factors to a flexible production scale model

This study examines the maximum net present value of the market entry and exit thresholds derived by the traditional net present value method and combines the real options approach for the project investment or disinvestment. The discounted and growth factors are incorporated into the proposed entry and exit models, facilitating the complicated calculations required to identify the discounted and growth rates so as to assess and determine the expected present value of uncertain cash flow streams. Consequently, this investigation successfully combines applying the maximum net present value method and the real options approach to decision-making with the simple consideration of the discounted and growth factors in the flexible production scale model.

A learning performance evaluation with benchmarking concept for English writing courses

This paper adopts data envelopment analysis (DEA), a robust and reliable evaluation method widely applied in various fields to explore the key indicators contributing to the learning performance of English freshmen writing courses in a university of Taiwan from the academic year 2004 to 2006. The results of DEA model applied in learning performance change our original viewpoint and reveal that some decision-making units (DMUs) with higher actual values of inputs and outputs have lower efficiency because the relative efficiency of each DMU is measured by their distance to the efficiency frontier. DMUs may refer to different facet reference sets according to their actual values located in lower or higher ranges. In the managerial strategy of educational field, the paper can encourage inefficient DMUs to always compare themselves with efficient DMUs in their range and make improvement little by little. The results of DEA model can also give clear indicators and the percentage of which input and output items to improve. The paper also demonstrates that the benchmarking characteristics of the DEA model can automatically segment all the DMUs into different levels based on the indicators fed into the performance evaluation mechanism. The efficient DMUs on the frontier curve can be considered as the boundaries of the classification which are systematically defined by the DEA model according to the statistic distribution.

The determinant of production entry and exit model on financing behavior

This study seeks for equity/debt values and the relevant potential firm value with financing or not when the real options approach is assessed. The paper deals with the following relative problems: (1) the assessment rule of decision whether to stop production or not; (2) whether the (dis) investment cost or salvage could reflect the production scale; (3) whether the rate of capital cost or the rate of return in different stages could reflect the suitable risk premium; (4) when the investment cost, exit cost, and salvage are the linear functions of production volume and follow the geometric Brownian motion to analyze the optimum external financing behavior and to decide the production thresholds of production entry and exit.

Convertible Bonds Issuance Terms, Management Forecasts, and Earnings Management: Evidence from Taiwan Market

Convertible bond (CB) issuers have been required to include financial forecasts in prospectuses filed with the Taiwan Securities and Futures Commission (TSFC) since 1991. This study examines the association between CB issuance terms and the extent of optimistic initial earnings forecasts and earnings management, as well as the association between CB issuance terms and the extent of reported (post-managed) earnings forecasts. Empirical results indicate that: (1) the likelihood of the issuing company making an optimistic initial earnings forecast (positive initial forecast error) increases with conversion price, issuance amount, and issuance period, but decreases with an increasing conversion period and reselling premium; (2) earnings management was pervasive in the year of issue of the CB; and (3) a substitutive relation exists between earnings management and issuance terms in CB issuing.

The optimal operational risk capital requirement by applying the advanced measurement approach

The purpose of this paper is to construct a risk quantification model to achieve the accurate operational risk management and gain the satisfying estimation and control of future possible extreme losses by using capital charges to assess operational risk. The paper takes a case bank as the research object and compares the differences under various circumstances engaging the Basic Indicator Approach, the Standardized Approach, and the Advanced Measurement Approach for the operational risk capital requirement of a bank. The results indicate that it is more appropriate to adopt the Advanced Measurement Approach to estimate the operational risk capital requirement; this way can help a bank enjoy a much lessened capital charge required and subsequently its available capital increases. Hence, it allows a bank to have sufficient funds in operations and reduce the burden of capital costs. Therefore, it will bring the positive benefits to the whole banking industry when enforcing the Advanced Measurement Approach.

An internet banking system establishment with transaction rate uncertainty: a real options approach

This study investigates the entry threshold for providing a new transaction service channel via the real options approach, where the entry threshold is established by using an Internet banking system designed for the use of financial institutions under transaction rate uncertainty. This work is based on the assumption that an Internet banking system requires a limited replacement period of equipments or software upgrades, which will be charged as a fixed cost when the system is renewed following the replacement period. Additionally, the current paper discusses the differences between the real options approach and the conventional net present value method. Sensitivity analyses of related parameters are also conducted through numerical simulation. The results of the novel approach presented in this study provide a valuable reference for financial institutions to establish Internet banking systems.

The determinants of mortgage defaults and prepayments

This paper applies the logistic regression models and performs an empirical study by dividing the factors that affect defaults and prepayments into the personal factors of the borrowers (including whether the borrowers provide sources of repayments, sexes, ages, and marital statuses), contract terms (including loan maturities, loan amounts, interest rates, percentage of loans against collaterals), and external factors (such as the number of times when the real estate price indexes going up and down). According to the empirical findings, the factors that have significant influences on defaults are the provision of repayment sources (negative), borrowing interest rates (positive), the percentage of loans (positive), marital statuses (negative), the number of times when the real estate price indexes going up (positive), and the number of times when the real estate price indexes going down (negative); the factors that have significant influences on prepayments are the provision of repayment sources (negative), loan maturities (positive), borrowing interest rates (positive), the number of times when the real estate price indexes going up (negative), and the number of times when the real estate price indexes going down (positive).

Analysis of required and matching loan qualities in financial institutions

Abstract This study attempts to design required and matching loan quality models with three different factors for assessing credit risk. The models include three participants: the depositor assessing the financial institution, the financial institution pricing a financing project, and the investment agency assessing the financial goods provided as security on loans when the financial institution securitizes certain assets. This investigation subsequently considers the matching loan qualities in extended models, which are the compromises between the financial institution and the depositor or investment agency when their required loan qualities match the same criteria.