Performance Evaluation of the Taiwanese Banking Industry before and after the COVID-19 Pandemic

This study aimed to explore efficiency changes in Taiwan’s banking industry before and after the outbreak of coronavirus disease 2019 (COVID-19) by using the maximum slacks-based measure approach. The data, spanning from 2018 to 2021, categorized banks into three systems: state-owned, private, and foreign. Bank performance was measured from two perspectives: single-period evaluation (assessing bank performance in each year individually) and cross-period evaluation (assessing bank performance from 2018 to 2021 collectively). Inter-temporal changes in bank performance across the three banking systems were analyzed. The results indicated that only foreign banks rebounded rapidly after the COVID-19 outbreak, while the average performance of private banks remained stagnant, and state-owned banks performed worse than before the outbreak. Therefore, it is recommended that state-owned banks develop effective and rapid improvement policies to address major emergencies. Additionally, the study found that inefficiencies in banks were due to excessive input resources and/or failure to achieve the output targets. The input–output gap of inefficient banks was also analyzed, providing learning benchmarks and clear improvement targets that can help these banks formulate practical actions to improve their performance.