Abstract
This paper investigates the integration of the Synthetic Control Method (SCM), a proven method to analyze an impact of policy interventions, and Data Envelopment Analysis (DEA), a well-known mathematical technique for measuring relative efficiency of decision-making units with multiple inputs and multiple outputs, to evaluate the effect of policy interventions on the efficiency of decision-making unit. Specifically, this paper applies these methodologies to assess the efficiency of Serbian banks over a given period, focusing on the influence of a merger between two principal banks on their operational performance, and answering a counterfactual question whether efficiency of a bank would be the same if a merger did not happen. The study demonstrates that SCM can be an effective tool for analyzing the repercussions of policy measures on decision-making unit efficiency. In other words, we suggest combining these two methods in the future, in order to conclude whether an intervention really has an impact on efficiency.
Sandro Radovanović
Assistant Professor at University of Belgrade
My research interests include machine learning, development and design of decision support systems, decision theory, and fairness and justice concepts in algorithmic decision making.