New Economics Papers
on Efficiency and Productivity
Issue of 2009‒04‒05
twelve papers chosen by

  1. Assessing Output and Productivity Growth in the Banking Industry By Panayiotis P. Athanasoglou; Evangelia A. Georgiou; Christos C. Staikouras
  2. Robust, dynamic nonparametric benchmarking: the evolution of cost-productivity and efficiency among U.S. credit unions By David C. Wheelock; Paul Wilson
  3. Do university units differ in the efficiency of resource utilization? By Daghbashyan, Zara
  4. Agglomeration and Productivity - evidence from firm-level data By Andersson, Martin; Lööf, Hans
  5. The joint estimation of bank-level market power and efficiency By Delis, Manthos D; Tsionas, Efthymios
  6. Determinants of Export Behaviour of German Business Services Companies By Alexander Eickelpasch; Alexander Vogel
  7. Financial Openness and Productivity By Geert Bekaert; Campbell R. Harvey; Christian Lundblad
  8. Financial Crisis, Firm Dynamics and Aggregate Productivity in Japan By HOSONO Kaoru
  9. The Macroeconomic Effects of European Financial Development : A Heterogenous Panel Analysis By Sean Holly; Mehdi Raissi
  10. Entry barriers, competition, and technology adoption By Lei Fang
  11. Bank-Level Estimates of Market Power By Sophocles N. Brissimis; Manthos D. Delis
  12. Introduction to price and productivity measurement for housing By Bert M. Balk; W. Erwin Diewert; Alice O. Nakamura

  1. By: Panayiotis P. Athanasoglou (Bank of Greece); Evangelia A. Georgiou (Bank of Greece); Christos C. Staikouras (Athens University of Economics and Business)
    Abstract: This paper assesses the evolution of output and productivity in the Greek banking industry for the period 1990-2006. Three main categories of bank output were estimated based on modern theoretical approaches, while for the aggregation and estimation of output and inputs and the estimation of productivity (partial and total factor) we relied on the index number method (Tornqvist index). Additionally, we considered the effect of labor quality on banks’ productivity and using a growth accounting framework we examined the contribution of total factor productivity (TFP) to bank output growth. The results show that bank output and labor productivity increased considerably during the period under examination, outpacing the respective GDP growth and labor productivity of the Greek economy. Capital productivity and TFP of the Greek banking industry have also improved remarkably mainly since 1999, as a result of the structural changes that took place within the industry, capital investments (mainly in IT equipment) as well as improvement in the quality of human capital.
    Keywords: Bank output; user-cost approach; total factor productivity; Tornqvist index; growth accounting; labor quality
    JEL: D24 G21 J24 O47
    Date: 2008–11
  2. By: David C. Wheelock; Paul Wilson
    Abstract: This paper develops a new methodology for estimating cost-productivity and efficiency change that benchmarks the performance of individual firms against an estimated a-quantile. We adapt the estimators of Daouia and Simar (2007) and Wheelock and Wilson (2008a) to the estimation of cost efficiency where input prices and some outputs are fixed. Theoretical results demonstrate that our new estimator retains the root-n convergence, asymptotic normality, and other desirable properties of the original estimators. We show how the estimator can be used to construct a cost analog of the widely-used Malmquist productivity index. In addition, we propose a new decomposition of the Malmquist index to reveal the sources of changes in scale efficiency that affect changes in cost-productivity. We examine changes in the efficiency and productivity of U.S. credit unions between 1989 and 2006. We find that productivity increased among the largest 20-percent of credit unions, as well as for credit unions that grew substantially in size during 1989-2006.
    Keywords: Credit unions
    Date: 2009
  3. By: Daghbashyan, Zara (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Many efficiency studies have been conducted to look at the relative performance of universities. Judgments were made on the overall performance of universities compared to the best performing ones in the sample. Meanwhile the possibility of efficiency variation within the same university was not taken into account. The focus of this paper is on the measurement of technical efficiency within the units of the same university. It is interesting to see if the average efficiency score of university can reflect the performance of various units operating within the same technical university. The analysis is conducted for the Royal Institute of Technology of Sweden (KTH), using the data from the Research Assessment Exercise conducted by KTH in 2008. It provides a unique opportunity of quantifying different teaching and research outputs while controlling for quality.Technical efficiency scores are estimated using non-parametric production frontier methodologies. Different model specifications are tested.
    Keywords: Technical and scale efficiency; Data envelopment analysis; universities
    JEL: C14 I21 I23
    Date: 2009–04–01
  4. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Do agglomerations stimulate productivity? An extensive literature on agglomeration economies, or urban increasing returns, has analyzed this question with aggregated spatial data. This paper estimates the relationship between agglomeration and productivity at the firm level using static and dynamic models. It makes use of a rich dataset comprising register information on all manufacturing firms in Sweden with 10 or more employees over the period 1997-2004. Three things emerge. First, firms located in larger regions are more productive when controlling for size, human capital, physical capital, ownership structure, import and export, industry classification and time trend. Second, results from dynamic panel estimations suggest a learning effect in that agglomeration enhances firms’ productivity. Third, the role of agglomeration phenomena does not seem to have a clear coupling to firm size.
    Keywords: productivity; agglomeration economies; spatial externalities; external scale economies; urban increasing returns; spatial selection
    JEL: L25 R12 R30
    Date: 2009–03–25
  5. By: Delis, Manthos D; Tsionas, Efthymios
    Abstract: The aim of this study is to provide a methodology for the joint estimation of efficiency and market power of individual banks. The proposed method utilizes the separate implications of the new empirical industrial organization and the stochastic frontier literatures and suggests identification using the local maximum likelihood (LML) technique. Through LML, estimation of market power of individual banks becomes feasible, while a number of restrictive theoretical and empirical assumptions are relaxed. The empirical analysis is carried out on the basis of EMU and US bank data and the results suggest small differences in the market power and efficiency levels of banks between the two samples. Market power estimates indicate fairly competitive conduct in general; however, heterogeneity in market power estimates is substantial across banks within each sample. The latter result suggests that while the banking industries examined are fairly competitive in general, the practice of some banks deviates from the average behavior, and this finding has important policy implications. Finally, efficiency and market power present a negative relationship, which is in line with the so-called “quiet life hypothesis”.
    Keywords: Efficiency; market power; local maximum likelihood
    JEL: L11 C14 G21
    Date: 2009–01–07
  6. By: Alexander Eickelpasch (Deutsches Institut für Wirtschaftsforschung, Department of Innovation, Manufacturing, Service); Alexander Vogel (Institute of Economics, University of Lüneburg)
    Abstract: The determinants of export behaviour at firm level have been widely investigated for manufacturing companies. By contrast, what has remained largely neglected is a detailed investigation in the service sector. As aggregate statistics show, international trade in services has grown significantly over the last few years. However, it is unclear why some companies export and others do not. This paper presents some initial results about the German business services sector at firm level. Using a unique panel dataset of enterprises from the business services sector (transport, storage and communication, real estate, renting and business activities) for the years 2003 to 2005, we analysed the impact of several firm-specific characteristics such as size, productivity, human capital, experience on the national market in Germany, etc. on the firms’ export performance. Further, we used the pooled fractional probit estimator, recently introduced by Papke & Wooldridge, an approach that considers both the special nature of the export intensity variable and in addition unobserved time-invariant characteristics. When there is no control for fixed enterprise effects the overall results are in line with previous studies. When there is a control for unobserved heterogeneity, the positive effects of productivity and human capital disappear, indicating that these variables are not per se positively related to export performance, but rather to time-constant characteristics that are unobserved. Size and product diversification still have a positive and significant effect.
    Keywords: Business services sector, export behaviour, firm performance
    JEL: F14 F23 L80
    Date: 2009–03
  7. By: Geert Bekaert; Campbell R. Harvey; Christian Lundblad
    Abstract: Financial openness is often associated with higher rates of economic growth. We show that the impact of openness on factor productivity growth is more important than the effect on capital growth. This explains why the growth effects of liberalization appear to be largely permanent, not temporary. We attribute these permanent liberalization effects to the role financial openness plays in stock market and banking sector development, and to changes in the quality of institutions. We find some indirect evidence of higher investment efficiency post-liberalization. We also document threshold effects: countries that are more financially developed or have higher quality of institutions experience larger productivity growth responses. Finally, we show that the growth boost from openness outweighs the detrimental loss in growth from global or regional banking crises.
    JEL: F15 F30 F36 F43 G15 G28
    Date: 2009–04
  8. By: HOSONO Kaoru
    Abstract: Using a dynamic general equilibrium model of firm dynamics that incorporates financial intermediation costs, we quantify the degree to which the deterioration in the health of banks during the Japanese banking crisis had an impact on aggregate productivity through firm dynamics. We find that the deterioration of bank health accounts for about 20 percent to 30 percent of the actual decline in the de-trended TFP during the crisis period (1996-2002). Our results suggest that differential impacts of financial intermediation costs between more and less productive firms or between entrants and incumbents are essential to quantitatively assess the aggregate consequences of financial crises.
    Date: 2009–04
  9. By: Sean Holly; Mehdi Raissi
    Abstract: This paper investigates the macroeconomic benefits of international financial integration and domestic financial sector development for the European Union. The sample consists of 26 European countries with annual data during the period 1970.2004. We attempt to exploit more fully the temporal dimension in the data by making use of the common correlated effects (CCE) estimator. We also account for the nonstationarity of time series by employing the cross-section augmented panel unit root test of Pesaran (2007) and recently developed panel cointegration techniques. We check the robustness of these results by using the fully modified OLS method of Pedroni (2000). Our empirical results suggest a relationship between domestic financial sector development and labour productivity. We report evidence that real GDP per worker is positively linked to a measure of international financial integration (stock of international financial assets and liabilities expressed as a ratio to GDP). We also try to disentangle the effects on real GDP per worker of di¤erent types of capital flows (FDI, Portfolio equity, Debt) and are able to identify a significant positive effect on GDP per worker of debt inflows which we could attribute to the institutional environment that has been fostered by the European Union.
    Date: 2009
  10. By: Lei Fang
    Abstract: There are large differences in income per capita across countries. Growth accounting finds that a large part of the differences comes from the differences in total factor productivity (TFP). This paper explores whether barrier to entry is an important factor for the cross-country differences in TFP. The paper develops a new model to link entry barriers and technology adoption. In the model, higher barriers to entry effectively reduce entry threat, and lower entry threat leads to adoption of less productive technologies. The paper demonstrates that technology adopted in the economy with entry threats is at least as good as the technology adopted in the economy without entry threats. Moreover, the paper presents numerical simulations that suggest entry barriers could be a quantitatively important reason for cross-country differences in TFP and are more harmful to productivity in the countries with monopolists facing inelastic demand. incompl s
    Keywords: entry barriers, technology adoption, total factor productivity CL HG2567 A4A5
    Date: 2009
  11. By: Sophocles N. Brissimis (Bank of Greece); Manthos D. Delis (University of Ioannina)
    Abstract: The aim of this study is to provide an empirical methodology for the estimation of market power of individual banks. The new method employs the well-known model of Panzar and Rosse (1987) and proposes its estimation using the local regression technique. Thus, a number of restrictive assumptions regarding the properties of the production function of banks are relaxed, while the method proves successful in providing reasonable estimates of bank-level market power when applied to a large panel of banks of transition countries. The empirical results suggest that many banks in the sample deviate significantly from competitive practices and that market power varies substantially across banks in each country. Country averages of the bank-level results exhibit a very close relationship with standard, industry-level Panzar-Rosse estimates.
    Keywords: Bank output; Market power; bank-level; local regression
    JEL: G21 L11 C14
    Date: 2009–01
  12. By: Bert M. Balk; W. Erwin Diewert; Alice O. Nakamura
    Abstract: This paper provides a brief introduction to a proposed new opportunity cost treatment of owner-occupied housing in measures of inflation for the United States. In addition, the paper introduces, and provides links to, a collection of nine other papers that discuss various aspects of the treatment of owner-occupied housing in measures of inflation for a number of nations, including Canada, Germany, Iceland, and the United States.
    Keywords: Durable goods, Consumer ; Consumer price indexes ; Cost of living adjustments ; Housing; Durable goods, Consumer Price Index, Cost of Living Index, Owner-occupied Housing, depreciation, hedonic regression models, rental equivalence approach, acquisitions approach, user cost approach, payments approach, maintenance and repair, renovations expenditures
    Date: 2009

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