New Economics Papers
on Efficiency and Productivity
Issue of 2005‒04‒03
two papers chosen by

  1. Labor-Use Efficiency in Indian Banking: A Branch Level Analysis By Abhiman Das; Subhash C. Ray; Ashok Nag
  2. Technical Efficiency and Stock Market Reaction to Horizontal Mergers By Yanna Wu; Subhash C. Ray

  1. By: Abhiman Das (Reserve Bank of India); Subhash C. Ray (University of Connecticut); Ashok Nag (Reserve Bank of India)
    Abstract: This paper uses Data Envelopment Analysis to measure labor use efficiency of individual branches of a large public sector bank with several thousand branches across India. We find considerable variation in the average levels of efficiency across the four metropolitan regions considered in this study. In this context, we introduce the concept of area or spatial efficiency for each region relative to the nation as a whole. Our findings suggest that the policies, procedures, and incentives handed down from the corporate level cannot fully neutralize the influence of the local work culture in the different regions. Most of the potential reduction in labor cost appears to be coming from possible downsizing the clerical and subordinate staff. Our analysis identifies branches that operate at very low levels of efficiency and may be gainfully merged with other branches wherever possible.
    Keywords: Bank, Efficiency, Branch, Cost
    JEL: G21 G28 L11 L89 C33
    Date: 2005–03
  2. By: Yanna Wu (PricewaterhouseCooper LLP); Subhash C. Ray (University of Connecticut)
    Abstract: This study examines the relationship between stock market reaction to horizontal merger announcements and technical efficiency levels of the participating firms. The analysis is based on data pertaining to eighty mergers between firms in the U.S. manufacturing industry during the 1990s. We employ Data Envelopment Analysis (DEA) to measure technical efficiency, which capture the firms. competence to produce the maximum output given certain productive resources. Abnormal returns related to the merger announcements provide the investor.s re-evaluation on the future performance of the participating firms. In order to avoid the problem of nonnormality, heteroskedasticity in the regression analysis, bootstrap method is employed for estimations and inferences. We found that there is a significant relationship between technical efficiency and market response. The market apparently welcomes the merger as an arrangement to improve resource utilizations.
    JEL: G14 C61 C15
    Date: 2005–03

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