A stable and efficient banking sector is an essential precondition to increase the economic level of a country. Taiwan's banking industry remains highly fragmented and competitive after a series of financial liberalization and restructuring (Yang & Liu, 2012). This study attempts to measure the relative performance of 35 Taiwanese commercial banks for the period from 2010 to 2017 for empirical analysis by using Data Envelopment Analysis (DEA) approach for calculating bank efficiency and a Malmquist total factor productivity index for measuring productivity change of banks. DEA is capable of handling multiple inputs and outputs and the sources of inefficiency can be analyzed and quantified for every evaluated unit. The aim of this study is to estimate and compare the efficiency of the banking sector in Taiwan. The results reveals that the large size banks were working more efficiency than firms in medium and small-sized banks.
