nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2008‒12‒01
eleven papers chosen by
Angelo Zago
University of Verona

  1. Identifying productivity change in Botswana’s financial institutions: an application of Malmquist productivity indices By Moffat, Boitnmelo; Valadkhani, Abbas; Harvie, Charles
  2. The evolution and main determinants of productivity in Brazilian electricity distribution 1998-2005: an empirical analysis By Francisco J. Ramos-Real; Beatriz Tovar; Mariana Iootty; Edmar Fagundes de Almeida; Helder Jr. Queiroz Pinto
  3. Higher Productivity in Importing German Manufacturing Firms: Self-selection, Learning from Importing, or Both? By Alexander Vogel and Joachim Wagner
  4. The Quiet Life Hypothesis in Banking - Evidence from German Savings Banks By Oliver Vins; Michael Koetter
  5. Marginal Intra Industry Trade Expansion and Productivity Growth By Ville Kaitila
  6. Technical efficiency in Botswana’s financial institutions: a DEA approach By Moffat, Boitnmelo; Valadkhani, Abbas
  7. Dissynergies of Mergers among Local Banks By Thomas Bloch
  8. Is corruption an efficient grease? By Méon, Pierre-Guillaume; Weill, Laurent
  9. Competition, Innovation and Distance to Frontier By Bruno Amable; Lilas Demmou; Ivan Ledezma
  10. Do Temporary Contracts Affect TFP? Evidence from Spanish Manufacturing Firms By Dolado, Juan José; Stucchi, Rodolfo
  11. Institutional Ownership and the Returns on Investment By Bjuggren, Per-Olof; Eklund, Johan; Wiberg, Daniel

  1. By: Moffat, Boitnmelo (University of Wollongong); Valadkhani, Abbas (University of Wollongong); Harvie, Charles (University of Wollongong)
    Abstract: The productivity and efficiency of the financial sector is pivotal to the attainment of economic growth and development in developed and developing economies alike, and is of particular interest in the wake of financial sector reform and restructuring. This study applies the Malmquist productivity index to measure and decompose the total factor productivity change of ten financial institutions in Botswana in its post reform era, covering the period 2001-2006, into a ‘catching up’ or efficiency change, and a ‘frontier shift’ or technological change. The robustness and sensitivity of the empirical results presented is assessed by comparing outcomes from different input and output combinations derived from using the value added, intermediation and operating approaches. The empirical results indicate a loss or little productivity gain in Botswana’s financial institutions, arising mainly from technological regress. Policy implications from this are highlighted in the paper.
    Keywords: Botswana, Malmquist indices, Productivity, Financial Institutions
    JEL: C14 C61 C6 G2 G21
    Date: 2008
    URL: http://d.repec.org/n?u=RePEc:uow:depec1:wp08-13&r=eff
  2. By: Francisco J. Ramos-Real; Beatriz Tovar; Mariana Iootty; Edmar Fagundes de Almeida; Helder Jr. Queiroz Pinto
    Abstract: This paper estimates changes in the productivity of the Brazilian electricity distribution sector using Data Envelopment Analysis (DEA) on a panel of 18 firms from 1998-2005. The study decomposes the productivity change of these distribution firms in terms of technical efficiency; scale-efficiency and technical progress. This exercise aims to help the understanding of the main determinants of the evolution of productivity, focusing its relationship with the restructuring process implemented in the 1990s. TFP index records a yearly positive growth rate of 1.3% in the whole period under analysis for all firms. Technical change was the main component behind this evolution, with an average growth of 2.1% per year, while technical efficiency presented a yearly negative performance of -0.8%. The results prove that, in general terms; the incentives generated in the reform process do not seem to have led the firms to behave in a more efficient manner.
    Date: 2008–11
    URL: http://d.repec.org/n?u=RePEc:fda:fdaddt:2008-41&r=eff
  3. By: Alexander Vogel and Joachim Wagner (Institute of Economics, University of Lüneburg)
    Abstract: This paper uses a newly available comprehensive panel data set for manufacturing enterprises from 2001 to 2005 to document the first empirical results on the relationship between imports and productivity for Germany, a leading actor on the world market for goods. Furthermore, for the first time the direction of causality in this relationship is investigated systematically by testing for self-selection of more productive firms into importing, and for productivity-enhancing effects of imports (‘learning-by-importing’). We find a positive link between importing and productivity. From an empirical model with fixed enterprise effects that controls for firm size, industry, and unobservable firm heterogeneity we see that the premia for trading internationally are about the same in West and East Germany. Compared to firms that do not trade at all two-way traders do have the highest premia, followed by firms that only export, while firms that only import have the smallest estimated premia. We find evidence for a positive impact of productivity on importing, pointing to self-selection of more productive enterprises into imports, but no evidence for positive effects of importing on productivity due to learning-by-importing.
    Keywords: imports, exports, productivity, enterprise panel data, Germany
    JEL: F14 D21
    Date: 2008–11
    URL: http://d.repec.org/n?u=RePEc:lue:wpaper:106&r=eff
  4. By: Oliver Vins; Michael Koetter
    Abstract: The "quiet life hypothesis (QLH)" posits that banks enjoy the advantages of market power in terms of foregone revenues or cost savings. We suggest a unied approach to measure competition and efficiency simultaneously to test this hypothesis. We estimate bank-specific Lerner indices as measures of competition and test if cost and profitt efficiency are negatively related to market power in the case of German savings banks. We find that both market power and average revenues declined among these banks between 1996 and 2006. While we find clear evidence supporting the QLH, estimated effects of the QLH are small from an economical perspective.
    JEL: E42 E52 E58 G21 G28
    Date: 2008–11
    URL: http://d.repec.org/n?u=RePEc:fra:franaf:190&r=eff
  5. By: Ville Kaitila
    Abstract: ABSTRACT : We use the concept of marginal intra-industry trade (MIIT) to analyse the effect of trade expansion on labour productivity growth across 23 EU countries and 94 manufacturing sectors in 1995-2005. The highest MIIT index values are found in sectors producing differentiated goods as well as in science and scale-intensive sectors, while the lowest are found in resource and labour-intensive sectors. Thus specialisation in sectors characterised by traditional comparative advantage has been associated with slower productivity growth. The results indicate that a trade-flow expansion characterised by intra-industry trade (high MIIT) is associated with faster productivity growth also after we control for the size in trade flow changes. Especially the increase in imports seems important. The analysis is mostly done using random-effects linear model specifications but further evidence is presented using several other estimation methods.
    Keywords: productivity, growth, marginal intra-industry trade
    JEL: J24 F1 C23
    Date: 2008–11–19
    URL: http://d.repec.org/n?u=RePEc:rif:dpaper:1164&r=eff
  6. By: Moffat, Boitnmelo (University of Wollongong); Valadkhani, Abbas (University of Wollongong)
    Abstract: This paper examines technical and pure technical efficiencies of ten major financial institutions in Botswana for each year during the period 2001-2006 using data envelopment analysis. In order to obtain more robust and reliable results, the sensitivity of our efficiency indices were put into test by choosing three alternative approaches in specifying the mix of inputs and outputs. The empirical results indicate that: (a) no matter which approach and year are taken into consideration, Baroda and FNB (which are both foreign banks) and BSB (which is a publicly owned institution) are consistently among the most efficient institutions and BDC, ABC and NDB are the least efficient ones; (b) the most efficient banks are either small or large institutions in terms of their asset sizes; (c) due to the small sample size, the evidence of a relationship between the age of institutions and their technical efficiencies remains inconclusive. One can conclude that financial institutions can further enhance efficiency by adopting self-service technologies such as telephone and internet banking which can substantially reduce their service delivery costs.
    Keywords: Botswana, Technical efficiency, Data envelopment analysis, financial institutions.
    JEL: C14 C61 G21 G2
    Date: 2008
    URL: http://d.repec.org/n?u=RePEc:uow:depec1:wp08-14&r=eff
  7. By: Thomas Bloch
    Abstract: In this paper, we investigate how bank mergers affect bank revenues and present empirical evidence that mergers among banks have a substantial and persistent negative impact on merging banks’ revenues. We refer to merger related negative effects on banks’ revenues as dissynergies and suggest that they are a result of organizational diseconomies, the loss of customers and the temporary distraction of management from day-to-day operations by effecting the merger. For our analyses we draw on a proprietary data set with detailed financials of all 457 regional savings banks in Germany, which have been involved in 212 mergers between 1994 and 2006. We find that the negative impact of a merger on net operating revenues amounts to 3% of pro-forma consolidated banks’ operating profits and persists not only for the year of the merger but for up to four years post-merger. Only thereafter mergers exhibit a significantly superior performance compared to their respective pre-merger performance or the performance of their non-merging peers. The magnitude and persistence of merger related revenue dissynergies highlight their economic relevance. Previous research on post-merger performance mainly focuses on the effects from mergers on banks’ (cost) efficiency and profitability but fails to provide clear and consistent results. We are the first, to our knowledge, to examine the post-merger performance of banks’ net operating revenues and to empirically verify significant negative implications of mergers for banks’ net operating revenues. We propose that our finding of negative merger related effects on banks’ operating revenues is the reason why previous research fails to show merger related gains.
    JEL: G21 G34 L25 C23
    Date: 2008–11
    URL: http://d.repec.org/n?u=RePEc:fra:franaf:192&r=eff
  8. By: Méon, Pierre-Guillaume (BOFIT); Weill, Laurent (BOFIT)
    Abstract: This paper tests whether corruption may act as an efficient grease for the wheels of an oth-erwise deficient institutional framework. We analyze the interaction between aggregate efficiency, corruption, and other dimensions of governance for a panel of 54 developed and developing countries. Using three measures of corruption and five measures of other aspects of governance, we observe that corruption is consistently detrimental in countries where institutions are effective, but that it may be positively associated with efficiency in countries where institutions are ineffective. We thus find evidence of the grease the wheels hypothesis.
    Keywords: governance; corruption; income; aggregate productivity; efficiency
    JEL: C33 K40 O43 O47
    Date: 2008–11–21
    URL: http://d.repec.org/n?u=RePEc:hhs:bofitp:2008_020&r=eff
  9. By: Bruno Amable (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Lilas Demmou (DGTPE - Direction Générale du Trésor et de la Politique Economique); Ivan Ledezma (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: According to a recent literature, the positive effect of competition is supposed to be growing with the proximity to the technological frontier. Using a variety of indicators, the paper tests the effect of competition and regulation on innovative activity measured by patenting. The sample consists of a panel of 15 industries for 17 OECD countries over the period 1979-2003. Results show no evidence of a positive effect of competition growing with the proximity to the frontier. Two main configurations emerge. First, regulation has a positive effect whatever the distance to the frontier and the magnitude of its impact is higher the closer the industry is to the frontier. Second, the effect of regulation is negative far from the frontier and becomes positive (or non significant) when the technology gap decreases. These results contradict the belief in the innovation-boosting effect of product market deregulation such as taken into account in the Lisbon Strategy.
    Keywords: Innovation, competition, distance to frontier.
    Date: 2008–07
    URL: http://d.repec.org/n?u=RePEc:hal:journl:halshs-00340409_v1&r=eff
  10. By: Dolado, Juan José (Universidad Carlos III, Madrid); Stucchi, Rodolfo (Inter-American Development Bank)
    Abstract: This paper evaluates the impact of the widespread use of fixed-term contracts in Spain on firms' TFP, via its effect on workers' effort. We propose a simple analytical framework showing that, under plausible conditions, workers' effort depends positively on their perception (for given level of effort) about firms' willingness to convert fixed-term contracts into permanent ones. We test this implication using manufacturing firm level data from 1991 to 2005 by means of nonparametric tests of stochastic dominance and parametric multivariate regression approaches. Our main findings are that high conversion rates increase firm's productivity while high shares of temporary contracts decrease it. Both effects are quantitatively relevant.
    Keywords: temporary workers, workers' effort, firms' TFP
    JEL: C14 C52 D24 J24 J41
    Date: 2008–11
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp3832&r=eff
  11. By: Bjuggren, Per-Olof (Jönköping International Business School); Eklund, Johan (Ratio); Wiberg, Daniel (Jönköping International Business School)
    Abstract: By examining a large number of Swedish listed firms, we analyse how institutional and foreign owners affect investment performance. To measure investment performance Mueller and Reardon’s (1993) marginal q is used, although derived directly from Tobin’s average q. Marginal q measures the ratio of the return on investment to the cost of capital. Our findings show that both domestic and foreign institutional owners positively influence firm performance. Furthermore a non-linear relation between institutional ownership concentration and performance is found. This is consistent with positive incentive effects and negative entrenchment effects. During the last decades the ownership structure of Swedish firms has undergone dramatic changes: institutional and foreign investors have been increasing their stakes, whereas Swedish households have decreased in importance. Controlling owners, often founding families, remain in control by resorting to an extensive use of dual-class shares. The practice of dual-class shares which separates cash-flow rights and control rights is also found to be an important determinant of firm performance that eradicates the positive influence of institutional ownership.
    Keywords: Corporate governance; institutions; ownership; performance; Tobin’s q; marginal q;
    JEL: C23 G30 L25
    Date: 2008–11–25
    URL: http://d.repec.org/n?u=RePEc:hhs:ratioi:0128&r=eff

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