International Journal of Industrial Engineering & Production Research

Productivity growth and efficiency improvements are the major sources of economic development. Pure efficiency, scale efficiency, and technology are basic factors, and rules and regulations and balance are recently known factors affecting the Malmquist productivity index. In this paper, we focus on the role of physical space facilities of bank branches as a factor affecting the decomposition of Malmquist productivity index. First, we propose a new model applying weight restrictions in basic DEA models for constant returns to scale technologies. The weight restrictions increase the discrimination power of basic DEA models. Then the new model is used to develop an extended Malmquist index, which gives a novel decomposition describing the roll of bank branch facilities on productivity growth or decline. The validity of proposed method is confirmed with a real data of 74 commercial bank branches in two time periods 2017 and 2018 and the results for both traditional and extended Malmquist index are analyzed.