New Economics Papers
on Efficiency and Productivity
Issue of 2006‒07‒21
five papers chosen by

  1. Efficiency and Foreign Ownership in Banking: An International Comparison By Adnan Kasman; Saadet Kirbas Kasman; Oscar Carvallo
  2. Valuing Environmental Factors in Cost-Benefit Analysis Using Data Envelopment Analysis By Timo Kuosmanen
  3. Cross-Border Acquisitons and Target Firms' Performance: Evidence from Japanese Firm-Level Data By Kyoji Fukao; Keikok Ito; Hyeg Ug Kwon; Miho Takizawa
  4. Centralization or Decentralization of Decision Rights? Impact on IT Performance of Firms By Takahito Kanamori; Kazuyuki Motohashi
  5. Capacity Management of Intensive Care Units in a multi-specialty Hospital in India By Vohra Seema; Dutta Goutam; Ghosh D.K.

  1. By: Adnan Kasman (Department of Economics, Faculty of Business, Dokuz Eylül University); Saadet Kirbas Kasman (Department of Economics, Faculty of Business, Dokuz Eylül University); Oscar Carvallo (Venezuelan Banking Association)
    Abstract: This paper estimates cost and profit efficiency for Latin American and the Caribbean banking sectors. This study also conducts a comparative analysis of the performance of foreign and domestic banks operating in these counties. Using a model proposed by Battese and Coelli (1995), a common cost and profit frontiers with country-specific environmental variables have been estimated for a panel of 427 banking firms from sixteen countries. The empirical analysis reveals the importance of the environmental variables in explaining the efficiency differences among countries. The results show that profit efficiency levels are well below those corresponding to cost efficiency, implying that the most important inefficiency is on the revenue side. The results further indicate that on average foreign banks are more efficient than domestic banks.
    Keywords: Banking, efficiency, foreign ownership
    JEL: G21 G28
    Date: 2005–11–23
  2. By: Timo Kuosmanen (MTT Agrifood Research Finland)
    Abstract: Environmental cost-benefit analysis (ECBA) refers to social evaluation of investment projects and policies that involve significant environmental impacts. Valuation of the environmental impacts in monetary terms forms one of the critical steps in ECBA. We propose a new approach for environmental valuation within ECBA framework that is based on data envelopment analysis (DEA) and does not demand any price estimation for environmental impacts using traditional revealed or stated preference methods. We show that DEA can be modified to the context of CBA by using absolute shadow prices instead of traditionally used relative prices. We also discuss how the approach can be used for sensitive analysis which is an important part of ECBA. We illustrate the application of the DEA approach to ECBA by means of a hypothetical numerical example where a household considers investment to a new sport utility vehicle.
    Keywords: Cost-Benefit Analysis, Data Envelopment Analysis, Eco-Efficiency, Environmental Valuation, Environmental Performance, Performance Measurement
    JEL: C61 D61 Q51
    Date: 2006–06
  3. By: Kyoji Fukao; Keikok Ito; Hyeg Ug Kwon; Miho Takizawa
    Abstract: Using Japanese firm-level data for the period from 1994-2002, this paper examines whether a firm is chosen as an acquisition target based on its productivity level, profitability and other characteristics and whether the performance of Japanese firms that were acquired by foreign firms improves after the acquisition. In our previous study for the Japanese manufacturing sector, we found that M&As by foreigners brought a larger and quicker improvement in total factor productivity (TFP) and profit rates than M&As by domestic firms. However, it may argued that firms acquired by foreign firms showed better performance simply because foreign investors acquired more promising Japanese firms than Japanese investors did. In order to address this potential problem of selection bias problem, in this study we combine a difference-in-differences approach with propensity score matching. The basic idea of matching is that we look for firms that were not acquired by foreign firms but had similar characteristics to firms that were acquired by foreigners. Using these firms as control subjects and comparing the acquired firms and the control subjects, we examine whether firms acquired by foreigners show a greater improvement in performance than firms not acquired by foreigners. Both results from unmatched samples and matched samples show that foreign acquisitions improved target firms' productivity and profitability significantly more and quicker than acquisitions by domestic firms. Moreover, we find that there is no positive impact on target firms' profitability in the case of both within-group in-in acquisitions and in-in acquisitions by domestic outsiders. In fact, in the manufacturing sector, the return on assets even deteriorated one year and two years after within-group in-in acquisition, while the TFP growth rate was higher after within-group in-in acquisitions than after in-in acquisitions by outsiders. Our results imply that in the case of within-group in-in acquisitions, parent firms may be trying to quickly restructure acquired firms even at the cost of deteriorating profitability.
    Keywords: FDI, TFP, Acquisition, Selection bias, Propensity score matching, Average treatment effect
    JEL: C14 D24 F21 F23
    Date: 2006–07
  4. By: Takahito Kanamori; Kazuyuki Motohashi
    Abstract: The effects of IT on the decision making structure of firms has been a topic of debate for decades. On the one hand, IT increases the information available to top management, and the coordination advantages that it provides may lead firms to centralize decision making. On the other hand, IT makes it possible to disseminate global information of the firm to line workers enabling them to make better decisions as well as enhances management's monitoring capability, favoring decentralization. In order to understand the economy wide effects of centralization and decentralization of decision rights on the productivity effect of IT, we conduct an empirical analysis to examine the change in the effects of IT performance in firms that changed its decision making structure, using a panel data set for 2,300 Japanese firms over 4 years. Our results indicate that both centralization and decentralization have a substantial productivity effect on IT for firms that changed its decision making structure and the productivity effects are more marked for firms that conducted radical change of decision rights. Moreover, we find evidence that changes in decision rights have a more pronounced productivity effect on large firms. Finally, our results show that productivity effects due to changes in decision rights are realized only in the non-manufacturing sectors. This paper sheds some light on the effects of decision rights on firms' IT performance and underscores the importance of organizational redesign accompanying IT investment.
    Date: 2006–07
  5. By: Vohra Seema; Dutta Goutam; Ghosh D.K.
    Abstract: In this paper, we describe the capacity management of Intensive Care Units (ICUs) in a 300-bed multi-specialty hospital where the alternative ICU is utilized when the appropriate ICU is full for a set of two types of ICUs. Inter-arrival time and service time distributions in these ICUs have been tested and found to be exponentially distributed. While most capacity management models are deterministic in nature, we have developed a queuing model to provide a basis for decision-making in the design and management of these ICUs. The model results in around 19800 linear steady state equations, which are solved using the CPLEX linear optimization solver. Based on real data available from a hospital in India, the results demonstrate that the utilization of the ICU beds will improve up to 28 percent when admissions to the alternative ICU are permitted.
    Keywords: OR in health services, Queuing, Productivity and Competitiveness
    Date: 2006–07–12

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