New Economics Papers
on Efficiency and Productivity
Issue of 2008‒12‒21
seven papers chosen by

  1. Bank Efficiency and Share Prices in China: Empirical Evidence from a Three-Stage Banking Model By Abdul Majid, Muhamed Zulkhibri; Sufian, Fadzlan
  2. Efficiency in Indonesian Banking: Recent Evidence By Maximilian J. B. Hall; Mulinman D. Hadad; Wimboh Santoso; Ricky Satria; Karligash Kenjegalieva; Richard Simper
  3. Firm Turnover and Productivity Growth in the Canadian Retail Trade Sector By Baldwin, John R.; Gu, Wulong
  4. Heterogeneous Ideas Production and Endogenous Growth: An Empirical Investigation By Luintel, Kul B; Khan, Mosahid
  5. Enhancing the productivity of the service sector in Japan By Randall Jones; Taesik Yoon
  6. Is an Environmental Management System able to influence environmental and competitive performance? The case of the Eco-Management and Audit Scheme (EMAS) in the European Union By Francesco Testa; Fabio Iraldo
  7. Financial structure, financial development and banking fragility: International evidence By Ruiz-Porras, Antonio

  1. By: Abdul Majid, Muhamed Zulkhibri; Sufian, Fadzlan
    Abstract: This paper examines for the first time the relationship between China banks’ efficiency and its share price performance. Our analysis consists of three parts. First, we calculate the annual share price returns of the banks for each year between 1997 and 2006. Then we employ Data Envelopment Analysis (DEA) Window Analysis method, first proposed by Charnes et al. (1985) to estimate the efficiency of the banks. Finally, we estimate the annual share price returns over the change in efficiency, while controlling for other bank specific traits. The empirical findings suggest that large China banks have exhibited higher technical and pure technical efficiency levels compared to their small and medium sized bank counterparts, while the medium sized banks have exhibited higher scale efficiency. The relationship between China banks’ efficiency and share price performance suggest that bank efficiency estimates derived from the DEA Window Analysis method contributes significant information towards share price returns beyond that provided by financial information.
    Keywords: Bank Efficiency; Share Prices; DEA Window Analysis; China
    JEL: G1 G2
    Date: 2008–03–01
  2. By: Maximilian J. B. Hall (Dept of Economics, Loughborough University); Mulinman D. Hadad (Bank Indonesia, Jakarta, Indonesia); Wimboh Santoso (Bank Indonesia, Jakarta, Indonesia); Ricky Satria (Bank Indonesia, Jakarta, Indonesia); Karligash Kenjegalieva (Dept of Economics, Loughborough University); Richard Simper (Dept of Economics, Loughborough University)
    Abstract: In one of the first stand-alone studies covering the whole of the Indonesian banking industry, and utilising a unique dataset provided by the Indonesian central bank, this paper analyses the levels of intermediation-based efficiency obtained during 2007. Using Tone’s (2001) input-oriented, non-parametric slacks-based DEA model, and modifying it where necessary to deal with negative inputs and outputs (Sharp et al. 2006), we firstly estimate the relative average efficiencies of Indonesian banks, both overall, and by group, as determined by ‘bank total asset size’ and ‘bank status’. In the second part of the analysis, we adopt Simar and Wilson’s (2007) bootstrapping methodology to eliminate the ‘bias’ in the efficiency estimates and to formally test the impact of ‘bank total asset size’ and ‘bank status’ on Indonesian banks efficiencies. The results from the initial analysis show that: (i) average bank efficiency within the industry during 2007 lay between 62% – 67%; (ii) the most efficient group of banks was the ‘state-owned’ group with an average efficiency score over 90%, with the least efficient group being the ‘regional government-owned’ banks with average efficiency scores between 45% and 58%; (iii) ‘listed banks’ perform better, on average than ‘non-listed banks’; and (iv) ‘Islamic banks’, despite their different operational structure when compared with conventional banks, enjoyed average efficiency scores between 54% and 74%. In the second stage of the analysis, the bias corrected efficiency scores demonstrates that ‘regional government-owned’, ‘foreign exchange’, ‘non-foreign exchange’, and ‘joint-venture and foreign groupings’ were significantly less efficient than ‘state-owned’ banks, with the first-mentioned being the most inefficient and the other groupings ranked in ascending order of efficiency as listed. Moreover, ‘large total asset sized’ banks were shown to be more efficient than their ‘smaller total asset sized’ counterparts.
    Keywords: Indonesian Finance and Banking; Efficiency.
    JEL: C23 C52 G21
    Date: 2008–11
  3. By: Baldwin, John R.; Gu, Wulong
    Abstract: This paper examines firm turnover and productivity growth in the Canadian retail trade sector. Firm turnover occurs as the competitive process shifts market share from exiting firms and existing firms that contracted to entering firms and existing firms that expanded. There is considerably more firm turnover in the retail sector than in the manufacturing sector and more of it comes from entry and exit. Moreover, contrary to the manufacturing sector where only part of overall productivity growth comes from firm turnover and the re-allocation of resources from the less to the more productive, all of the aggregate productivity growth comes from this source in the retail sector. This suggests that the much-discussed Wal-Mart effect on retail sector productivity mainly comes from the Wal-Mart-created competitive pressure that shifts market share from exitors and declining incumbents to entrants and growing incumbents. Foreign-controlled firms contributed 30% of labour productivity growth and 45% of multifactor productivity growth in the retail trade sector in the period from 1984 to 1996, which are mainly due to the entry of foreign-controlled firms and expansion of more productive foreign-controlled existing firms.
    Keywords: Manufacturing, Retail and wholesale, Economic accounts, Productivity accounts
    Date: 2008–12–08
  4. By: Luintel, Kul B (Cardiff Business School); Khan, Mosahid
    Abstract: We examine the dynamics of ideas production and knowledge-productivity relationship in a panel of 19 OECD countries. A new data set of triadic patents is used. We rigorously address the issues of cross-country heterogeneity and endogeneity. Domestic and foreign ideas stocks exert positive but heterogeneous effects on ideas production. We find evidence of duplicate R&D but little support for endogenous growth. Countries with low domestic ideas bases could considerably improve productivity through ideas accumulation; however, this effect is modest for countries with sizeable ideas bases. An implication is that country-specific R&D policy appears potentially more effective than the one-size-fits-all approach.
    Keywords: Knowledge Stocks; Dynamic Heterogeneity; TFP; Methods of Moments
    JEL: F12 F2 O3 O4 C15
    Date: 2008–12
  5. By: Randall Jones; Taesik Yoon
    Abstract: Labour productivity growth in the service sector, which accounts for 70% of Japan’s economic output and employment, has slowed markedly in recent years in contrast to manufacturing. The disappointing performance is associated with weak competition in the service sector resulting from strict product market regulation and the low level of import penetration and inflows of foreign direct investment (FDI). Reversing the deceleration in productivity growth in the service sector is essential to raise Japan’s growth potential. The key is to eliminate entry barriers, accelerate regulatory reform, upgrade competition policy and reduce barriers to trade and inflows of FDI. Special attention should be given to factors limiting productivity growth in services characterised by either low productivity or high growth potential, such as retail, transport, energy and business services. Finally, it is essential to increase competition in public services, such as health and education, where market forces have been weak. <P>Améliorer la productivité dans le secteur des services au Japon <BR>La croissance de la productivité du travail dans le secteur des services, qui représente 70 % de la production économique et de l’emploi au Japon, s’est sensiblement ralentie ces dernières années contrairement à l’évolution observée dans le secteur manufacturier. Ces résultats décevants sont associés à la faiblesse de la concurrence dans les services imputable à la rigueur de la réglementation des marchés de produits, au faible niveau de pénétration des importations et au manque de dynamisme des investissements directs de l’étranger (IDE). Le ralentissement de la croissance de la productivité dans le secteur des services doit absolument être inversé pour accroître le potentiel de croissance du Japon. Il est indispensable d’éliminer les obstacles à l’entrée, d’accélérer la réforme de la réglementation, de renforcer la politique de concurrence et de réduire les obstacles au commerce et aux entrées d’IDE. Une attention particulière devrait être accordée aux facteurs limitant la croissance de la productivité dans les services caractérisés soit par une faible productivité, soit par un potentiel de croissance élevé, comme le commerce de détail, les transports, l’énergie et les services aux entreprises. Enfin, il est essentiel d’accroître la concurrence dans les services publics, comme la santé et l’éducation, où les forces du marché ont peu joué.
    Keywords: competition policy, politique de la concurrence, air transport, transport aérien, croissance de la productivité, Japan, Japon, regulatory reforms, réforme réglementaire, foreign direct investment, investissement direct étranger, productivity and growth, retail sector, electricity, gas, électricité, gaz, distribution de détail, public services, service sector, services trade, Business service
    JEL: R11 R21 R31
    Date: 2008–12–01
  6. By: Francesco Testa (Scuola Superiore Sant'Anna of Pisa); Fabio Iraldo (Scuola Superiore Sant'Anna of Pisa & IEFE – Institute for Environmental and Energy Policy and Economics, Bocconi University; Scuola Superiore Sant'Anna of Pisa & IEFE – Institute for Environmental and Energy Policy and Economics, Bocconi University)
    Abstract: The EMAS Regulation (Reg 761/01 EC) is an EU scheme for the implementation of an Environmental Management System (EMS) by any organization, implemented by the European Commission since the year 1993. The EMS has been originally proposed both by the European Commission and by ISO as the frontrunner of a series of policy tools that were conceived to enable companies to simultaneously pursue environmental objectives and competitive targets (in a synergetic way). Based on the unique dataset of the EVER project, this paper investigates whether or not an EMS implemented within the EMAS Regulation has an effect on firm performance both from an environmental and a competitive point of view. The econometric analysis shows a positive impact of well-designed environmental management system on environmental performance and, as a consequence, on technical and organizational innovations. Effects on other competitive variable as market performance, resource productivity and intangible asset are not strongly supported
    Date: 2008–12–12
  7. By: Ruiz-Porras, Antonio
    Abstract: We study the effects of financial structure and financial development on banking fragility. We develop our study by using fixed-effects panel-data regressions and by controlling the effects of certain banking indicators. We use individual and principal-components indicators of the activity, size and efficiency of intermediaries and markets. The indicators include data for 211 countries between 1990 and 2003. Our main findings suggest that banking stability is enhanced in market-based financial systems. Financial development reduces it. However this fragility-enhancing effect can be unveiled only when we account for financial structure. Thus, financial structure and development jointly matter to assess banking fragility.
    Keywords: Banks; fragility; financial structure; financial development
    JEL: N20 E44 G21
    Date: 2008–12–12

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