New Economics Papers
on Efficiency and Productivity
Issue of 2007‒10‒20
fifteen papers chosen by

  1. Education and growth: an industry-level analysis of the Portuguese manufacturing By Marta Simões; Adelaide Duarte
  2. Trip-Level Analysis of Efficiency Changes in Oregon’s Deepwater Trawl Fishery By David Tomberlin; Garth Holloway
  3. Technical Efficiency of Nigerian Insurance Companies By Carlos Pestana Barros; Echika Lemechi Obijiaku
  4. Fusões e Aquisições Bancárias no Brasil: Uma Avaliação da Eficiência Técnica e de Escala By João Adelino de Faria; Luiz Fernando de Paula; Alexandre Marinho
  5. Openess to trade and industry cost dispersion: Evidence from a panel of Italian firms By Massimo Del Gatto; Gianmarco I.P. Ottaviano; Marcello Pagnini
  6. The quality of banking and regional growth By Hasan, Iftekhar; Koetter, Michael; Wedow, Michael
  7. Bank ownership and efficiency in China: what lies ahead in the world’s largest nation? By Berger , Allen N; Hasan , Iftekhar; Zhou, Mingming
  8. Internal and External Restructuring over the Cycle: A Firm-Based Analysis of Gross Flows and Productivity Growth in Portugal By Carlos Carreira; Paulino Teixeira
  9. Liquidity Constraints and Entrepreneurial Performance By Hvide, Hans K.; Møen, Jarle
  10. Evaluating the Location Efficiency of Arabian and African Seaports Using Data Envelopment Analysis (DEA) By Ahmed Salem Al-Eraqi; Carlos Pestana Barros; Adli Mustaffa; Ahamad Tajudin Khader
  11. Agri-environmental auctions with synergies By Sandra Saïd; Sophie Thoyer
  12. Do Universal Banks Create Value? Universal Bank Affiliation and Company Performance in Belgium, 1905-1909 By Van Overfelt W.; Annaert J.; De Ceuster M.; Deloof M.
  13. Formation of SEZ, Agricultural Productivity and Urban Unemployment By Chaudhuri, Sarbajit; Yabuuchi, Shigemi
  14. Health Econometric: Uncovering the Anthropometric Behavior on Women's Labor Market By Lopez-Pablos, Rodrigo A.
  15. The Determinants of Mutual Fund Performance: A Cross-Country Study By Miguel A. Ferreira; António F. Miguel; Sofia Ramos

  1. By: Marta Simões (GEMF and Faculdade de Economia, Universidade de Coimbra); Adelaide Duarte (GEMF and Faculdade de Economia, Universidade de Coimbra)
    Abstract: TThis paper investigates the education–growth link at the more disaggregate industry level in the Portuguese manufacturing sector with a focus on different levels of education. The insights from new growth theory and a modified and augmented version of the Benhabib and Spiegel (1994) specification are the basis for the empirical analysis of the role of education in innovation and imitation activities highlighting a role for specific schooling levels across industries according to their technological characteristics and its interaction with international trade. We use data for the period 1986–1997, fourteen Portuguese manufacturing industries and panel data econometric techniques. Our most robust finding concerns the relevance of technology spillovers embodied in imports for productivity growth, as long as manufacturing industries employ workers with skills provided by secondary education. The Portuguese manufacturing industry cannot rely on automatic technological catch up for productivity growth so active trade and education policies are crucial to recover from the present bottom position in the rank of OECD productivity levels.
    Keywords: education, innovation, technology diffusion, productivity growth, panel data
    JEL: C23 I20 O30 O33
    Date: 2007
  2. By: David Tomberlin (National Marine Fisheries Service); Garth Holloway (University of Reading)
    Abstract: In 2003, an industry-financed, government-administered buyback of trawl fishing permits and vessels took place on the US West Coast, resulting in the retirement of about one-third of the limited-entry trawl fleet. The lack of cost data in this fishery precludes an analysis of how the buyback has affected profitability, but changes in technical efficiency can provide some insight into the program’s effects. This paper, the first of a planned series of analyses of the buyback’s effect on technical efficiency in the trawl fleet, applies stochastic frontier analysis to assess whether technical efficiency changed perceptibly after 2003. We adopt a hierarchical modeling approach estimated with Markov Chain Monte Carlo methods, and present results from both Cobb-Douglas and translog specifications. The analysis is limited to 13 boats active in Oregon’s deepwater ‘DTS’ fishery, which targets dover sole, thornyheads, and sablefish. The results suggest that the buyback has had little impact on trip-level technical efficiency in the study fishery. However, departures from the frontier are markedly bi-modal, indicating that a mixed-density approach to estimation may be more appropriate.
    Keywords: Fishery Buyback, Technical Efficiency, Stochastic Production Frontier, Bayesian Inference, Markov Chain Monte Carlo
    JEL: Q2 L5 C1
    Date: 2007–09
  3. By: Carlos Pestana Barros; Echika Lemechi Obijiaku
    Abstract: This paper uses data envelopment analysis (DEA) to evaluate the performance of Nigerian insurance companies, from 2001 to 2005, combining operational and financial variables. The paper also analyses the situations of these companies in relation to the frontier of best practices. In addition, it tests for the roles played by dimension, bank network and market share in the efficiency of the Nigerian insurance companies. The implications of this research for managerial purposes are then drawn.
    Keywords: Nigerian insurance companies; Data Envelopment Analysis; Efficiency.
    Date: 2007
  4. By: João Adelino de Faria; Luiz Fernando de Paula; Alexandre Marinho
    Abstract: The Brazilian banking sector experimented huge changes in the last years. This provoked a wave of banking mergers and acquisitions (M&As) and the penetration of some foreign banks in the Brazilian retail banking market. Bradesco, Itaú, Unibanco, Santander, ABN Amro and HSBC became the leaders of the private segment of banking sector. This paper aims at evaluating if M&As enhanced the efficiency of these banks. For this purpose, we use a non-parametric technique, Data Envelopment Analysis (DEA). The findings of the applied research show that there were improvements in the intermediation efficiency for all the six banks, while only two banks enhanced in the profit efficiency. Besides, there are a large range of constant returns of scale, that is between R$ 30-40 billion and R$ 100 billion.
    Date: 2006–11
  5. By: Massimo Del Gatto (University of Cagliari); Gianmarco I.P. Ottaviano (University of Bologna); Marcello Pagnini (Bank of Italy)
    Abstract: We use Italian firm-level data to investigate the impact of trade openness on the distribution of firms across marginal cost levels. In so doing, we implement a procedure that allows us to control not only for the standard transmission bias identified in firm-level TFP regressions but also for the omitted price bias due to imperfect competition. We find that more open industries are characterized by a smaller dispersion of costs across active firms. Moreover, in those industries the average cost is also smaller.
    Keywords: Cost dispersion, openness to trade, firm-level data, firm selection, total factor productivity.
    JEL: F12 F15 R13
    Date: 2007–06
  6. By: Hasan, Iftekhar; Koetter, Michael; Wedow, Michael
    Abstract: We test whether output growth in European economic agglomeration regions depends on financial development. To this end we suggest a relative measure of the quality of financial institutions rather than the usual quantity proxy of nancial development. In order to measure the quality of financial development we use profit efficiency derived from stochastic frontier analysis. We show that more efficient banks spur regional growth while the typically used quantity measure of financial development is negligible. Also, our results suggest an additional channel through which better banking can spur growth: the interaction of more credit with efficient banks.
    Keywords: Bank performance, regional growth, bank efficiency, Europe
    JEL: G21 O16 O47 O52
    Date: 2007
  7. By: Berger , Allen N (Federal Reserve Board); Hasan , Iftekhar (Lally School of Management,Rensselaer Polytechnic Institute, and Bank of Finland Research); Zhou, Mingming
    Abstract: China is reforming its banking system, partially privatizing and permitting minority foreign ownership of three of the dominant ‘big four’ state-owned banks. This paper seeks to help predict the effects of this change by analysing the efficiency of virtually all Chinese banks in the years 1994–2003. Our findings suggest the big four banks are by far the least efficient and foreign banks the most efficient while minority foreign ownership is associated with significantly improved efficiency. We present corroborating robustness checks and offer several credible mechanisms through which minority foreign owners can increase Chinese bank efficiency. These findings suggest that minority foreign ownership of the big four is likely to significantly improve performance.
    Keywords: foreign banks; efficiency; foreign ownership
    JEL: F23 G21 G28 G34
    Date: 2007–10–10
  8. By: Carlos Carreira (GEMF and Faculdade de Economia, Universidade de Coimbra); Paulino Teixeira (GEMF and Faculdade de Economia, Universidade de Coimbra)
    Abstract: This paper discusses the role played by internal restructuring vis-à-vis external restructuring in industry productivity growth, arguing that the contribution of these two components is expected to be sensitive to the economic cycle. The study describes gross flows (job and output) over a period of one decade, and analyses the productivity differential among continuing, entering and exiting firms in the Portuguese manufacturing sector. The results of the decomposition of industry productivity growth suggest that the share of external restructuring is stronger in recession, while internal restructuring seems to be predominant in expansion. The strong and positive contribution of the cleansing effect, in 1991-1994, was not followed by any passive learning effect of equivalent magnitude in the 1994-1997 sub-period. The active learning effect, measured by the within effect, is, as expected, stronger when output growth is at its peak, but in no case large enough to turn productivity growth procyclical.
    Keywords: Cleansing, Active and passive learning, Internal restructuring, External restructuring, Productivity growth
    JEL: L60 L11 O47 O12
    Date: 2007
  9. By: Hvide, Hans K. (University of Aberdeen, Business School); Møen, Jarle (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: If entrepreneurs are liquidity constrained and cannot borrow to operate on an efficient scale, those with more personal wealth should do better than those with less wealth. We investigate this hypothesis using a unique dataset from Norway. Consistent with liquidity constraints being present, we find a strong positive relationship between founder prior wealth and start-up size. The relationship between prior wealth and start-up performance, as measured by profitability on assets, increases for the main bulk of the wealth distribution and decreases sharply at the top. We estimate that profitability on assets increases by about 8 percentage points from the 10th to the 75th percentile of the wealth distribution. This suggests an entrepreneurial production function with a region of increasing returns. Liquidity constraints may then stop entrepreneurs from being able to exploit a "hump" in marginal productivity. From the 75th to the 99th percentile returns drops by about 10 percentage points. This suggests that an abundance of liquidity may to do more harm than good.
    Keywords: Entrepreneurship; Household Finance; Private benefits; Start-ups; Wealth
    JEL: G14 L26 M13
    Date: 2007–09–21
  10. By: Ahmed Salem Al-Eraqi; Carlos Pestana Barros; Adli Mustaffa; Ahamad Tajudin Khader
    Abstract: In this paper the efficiency and performance is evaluated for 22 seaports in the region of East Africa and the Middle East. The aim of our study is to compare seaports situated on the maritime trade road between the East and the West. These are considered as middledistance ports at which goods from Europe and Far East/Australia can be exchanged and transhipped to all countries in the Middle East and East Africa. All these seaports are regional coasters, and dhow trade was built on these locations, leading this part of the world to become an important trade centre. Data was collected for 6 years (2000-2005) and a non-parametric linear programming method, DEA (Data Envelopment Analysis) is applied. The ultimate goal of our study is: 1) to estimate the performance levels of the ports under consideration. This will help in proposing solutions for better performance and developing future plans. 2) to select optimum transhipment locations.
    Keywords: Middle East and East African Seaports; Data Envelopment Analysis; Seaports Efficiency; Performance measurement of Containers Ports; transshipment.
    Date: 2007
  11. By: Sandra Saïd; Sophie Thoyer
    Abstract: Auctions are increasingly used in agri-environmental contracting. However, the issue of synergy effect between agri-environmental measures has been consistently overlooked, both by decision-makers and by the theoretical literature on conservation auction. Based on laboratory experiments, the objective of this paper is to compare the performance of different procurement auction designs (simultaneous, sequential and combinatorial) in the case of multiple heterogeneous units where bidders may potentially want to sell more than one unit and where their supply cost structure displays positive synergies. The comparison is made by using two performance criteria: budget efficiency and allocative efficiency. We also test if performance results are affected by information feedback to bidders after each auction period. Finally we explain performance results by the analysis of bidding behaviour in the three mechanisms.
    Date: 2007–09
  12. By: Van Overfelt W.; Annaert J.; De Ceuster M.; Deloof M.
    Abstract: We investigate the impact of universal banks on the performance and the risk of affiliated companies in an unregulated environment with booming financial markets. For a unique sample of 129 Belgian companies listed in the period 1905-1909, we find that universal bank affiliation had a positive impact on the market-to-book ratio and return-on-assets. The effect on performance was positively related to the degree of bank involvement. Universal banks significantly reduced the volatility of return-on-assets. Stock return performance, measured by the Sharpe ratio, was also significantly better for affiliated corporations.
    Date: 2007–01
  13. By: Chaudhuri, Sarbajit; Yabuuchi, Shigemi
    Abstract: Formation of SEZ using agricultural land to promote industrialization has recently been one of most controversial policy issues in many developing economies including India. This paper critically theoretically evaluates the consequences of this policy in terms of a three-sector Harris-Todaro type general equilibrium model reasonable for a developing economy. It finds that agriculture and SEZ can grow simultaneously provided the government spends more than a critical amount on irrigation projects and other infrastructural development designed for improving the efficiency of land. Agricultural wage and aggregate employment in the economy may also improve.
    Keywords: Special economic zone; fiscal concessions; agricultural productivity; rural wage; urban unemployment.
    JEL: R14 H54 R13
    Date: 2007–10–11
  14. By: Lopez-Pablos, Rodrigo A.
    Abstract: Exploring current literature that assess relations between cognitive ability and height, obesity, and its productivity-employability effect on women's labor market; we appraised the Argentine case to and these social-physical relations which involve anthropometric and traditional economic variables. Adapting an anthropometric Mincer approach by using probabilistic and censured econometric models which were developed for it. Subtle evidence of discriminative behavior on obese women, and a good performance of height variable as unobserved cognitive ability approximate measure to explain feminine productivity has been found.
    Keywords: Height; Obesity; Anthropometric Mincer; Discrimination.
    JEL: J24 I12 C34
    Date: 2007–08–30
  15. By: Miguel A. Ferreira (ISCTE Business School); António F. Miguel (ISCTE Business School); Sofia Ramos (ISCTE Business School)
    Abstract: This paper studies the performance of mutual funds around the world using a sample of 10,568 open-end actively managed equity funds from 19 countries between 1999 and 2005. Performance is measured using four alternative benchmark models, including an international version of the Cahart four-factor model. We regress abnormal performance on fund attributes such as age, size, fees, management structure, and management tenure. We also investigate whether country characteristics such as economic development, financial development, familiarity, and investor protection have additional explanatory power. The results show that large funds tend to perform better, which suggests the presence of significant economies of scale. When investing abroad, young funds are more able to obtain better performance. Performance is higher in funds with higher fees and that are managed by an individual manager with more experience. Mutual fund performance is better in countries with stronger legal institutions. Domestic funds located in developed countries, in particular with liquid stock markets, perform better. When investing abroad, familiarity and proximity enhances the performance of mutual funds.
    Keywords: Mutual funds, Performance, Fund attributes, Investor protection
    JEL: G15 G18 G23
    Date: 2006–11

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