OPERATIONAL EFFICIENCY ANALYSIS OF REGIONAL DEVELOPMENT BANKS USING DATA ENVELOPMENT ANALYSIS (DEA): A CASE OF STUDY OF BANK SUMUT

Abstract

This study analyzes the operational efficiency of Bank Sumut over the period 2014–2024 using an input-oriented Data Envelopment Analysis (DEA) approach, based on secondary data from annual financial reports. DEA is selected for its ability to assess the relative efficiency of decision-making units (DMUs) by accounting for multiple inputs and outputs without requiring a specific functional form. Beyond conventional efficiency measurement, the study highlights how optimal resource allocation—such as labor and capital—can enhance the bank’s contribution to sustainable development, in line with Indonesia’s transition toward a green economy. Key findings include: (1) annual efficiency scores benchmarked against industry standards, (2) identification of inefficiencies in the form of input excesses and output shortfalls, and (3) strategic recommendations to improve operational efficiency and resilience. By linking operational performance with sustainable financing capacity, this research offers a dual contribution: enriching the literature on regional bank efficiency and informing policy discussions on the role of Regional Development Banks (RDBs) in achieving the Sustainable Development Goals (SDGs), particularly in developing countries facing resource constraints.