New Economics Papers
on Efficiency and Productivity
Issue of 2010‒06‒11
eleven papers chosen by

  2. Improving Service Performance in Banking using Quality Adjusted Data Envelopment Analysis By Juraj Kopecsni
  3. The Causes of Profit Heterogeneity in Large Australian Firms By Andreas Stierwald
  4. Irish firms' productivity and imported inputs By FORLANI, Emanuele
  5. Does the institution of State Business Relations matter for Firm Performance? – A study of Indian Manufacturing By Kathuria, Vinish; Natarajan, Rajesh Raj; Sen, Kunal
  6. Infrastructures and productivity: an updated survey By Angel de la Fuente
  7. Output Quality, Skill Intensity, and Factor Contents of Trade: An empirical analysis based on microdata of the Census of Manufactures By FUKAO Kyoji; ITO Keiko
  8. Determinants of Portuguese Exports to Spain: An analysis at the enterprise level By Joana C. Lima; Horácio C. Faustino
  9. Effects of Ownership on Agglomeration Economies: Evidence from Ukrainian Firm Level Data By Volodymyr Vakhitov; Chris Bollinger
  10. The impact of mergers and acquisitions on the performance of Greek Banking Sector By Panagiotis Liargovas; Spyridon Repousis
  11. Regional efficiency of knowledge economy in the new EU countries: The Romanian and Bulgarian case By Roman, Monica

  1. By: Azza El-Shinnawy (Microsoft Education, Dubai)
    Abstract: In this paper, trends in total factor productivity (TFP) growth in 13 of Egypt's largest and oldest pharmaceutical generics firms are examined. The paper relies on data envelopment analysis (DEA) the non-parametric frontier methodology to obtain the Malmquist productivity index for the sample firms, which account for 50% of Egypt's generics market. The study period ranges from 1993 to 2005. Best-practice firms and laggard firms in the three aspects of efficiency change, technical change and TFP change are identified. Empirical results indicate the best-practice firm in terms of TFP change belongs to the private sector, while the laggard firm belongs to the state-owned public business sector. No differences of significance exist between the performance of private sector and state-owned generics companies. Additionally, state-owned companies which have been subject to partial privatization did not exhibit higher levels of TFP change than those which remained under full state-ownership. Empirical results also indicated that mean TFP change for the sample firms throughout the study period (1.01) exceeded the mean TFP change for all Egyptian industries (0.75), and that there was evident disassociation, or weak correlation at best, between productivity growth/regress and the degree of export orientation.
    Date: 2010–05
  2. By: Juraj Kopecsni (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: The goal of this research is to describe the application of data envelopment analysis (DEA) to the performance evaluations of bank branches. Special attention is focused on how to incorporate the quality dimension into branch efficiency. DEA will apply to a set of micro-data from a Czech commercial bank branch network. In the banking sector, providing services quality is one of the key focuses. Therefore, the quality dimension should be incorporated into the DEA model. The goal of the quality adjusted DEA model is to identify best practice branches that work efficiently and at the same time provide services with high quality. This model avoids productivity-quality tradeoff, which is present by the standard DEA model. The quality of services is measured by customer service, mystery shopping and calls, client information index, retention, and client product penetration. Main determinants of efficiency and quality level are branch size and region via purchasing power.
    Keywords: quality adjusted DEA, branch performance, scale efficiency, return to scale
    JEL: C14 C44 C61 L8
    Date: 2010–06
  3. By: Andreas Stierwald (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
    Abstract: The objective of this paper is to investigate the causes of heterogeneity in firm performance. In particular, the study decomposes unobserved heterogeneity in profitability into firm and industry effects and quantifies the relative importance of both these effects. For a sample of large Australian firms for the period 1995-2005, the estimation results indicate that almost two thirds of the heterogeneity can be explained by differences across firms, and that industry effects are of much less importance. Another result is that the level of total factor productivity, as a component of firm effects, significantly enhances profitability, but also that this relationship is not identical among firms.
    Keywords: firm performance, determinants of profit, multi-level analysis, firm effects
    JEL: C23 D24 L25
    Date: 2010–06
  4. By: FORLANI, Emanuele (Center for Operations Research and Econometrics (CORE), UniversitŽ catholique de Louvain (UCL), Louvain la Neuve, Belgium)
    Abstract: In this paper, we empirically analyze the evolution of firmsÕ productivity and how the efficiency changes with variations in the inputsÕ origin. Using firm-level information on a sample of Irish firms, we assess the importance of the imported inputsÕ quota for a firmÕs efficiency, as well as starting import activity. The main findings are that an increase in the intensive margin of imports raises firmsÕ efficiency of domestic firms; in addition heterogeneous effects across firms are detected. Unlike the findings of most of the literature, there is weak evidence of self-selection in import activity; differently from previous research when we introduce fixed effects, the self-selection disappears. Instead, the few observed firms that start importing raise their productivity compared to non-importing firms; learning by importing is suspected. The results suggest an important policy implication: policies that favor the imports of intermediates enhance the productivity of domestic firms, making them more competitive in the international markets.
    Keywords: firms' productivity, inputs, import, Ireland
    JEL: F10 F14 D24 L25
    Date: 2010–04–01
  5. By: Kathuria, Vinish; Natarajan, Rajesh Raj; Sen, Kunal
    Abstract: This paper examines the role of the external institutional environment captured by effective state-business relations on firm performance. By effective state-business relations, we mean a set of highly institutionalized, responsive and public interactions between the state and the business sector. We find that effective state-business relations have had a discernible positive impact on firm performance in Indian formal manufacturing for the years 2000-01 and 2004-05. We also find internal and external institutional factors are complementary to firm performance - smaller firms, firms in urban areas, older firms and firms in simpler organizational forms benefit more.
    Keywords: State business relations; firm productivity; manufacturing sector; India
    JEL: L25 O43 O53
    Date: 2010–06–03
  6. By: Angel de la Fuente
    Abstract: The relationship between infrastructures and productivity has been the subject of an ongoing debate during the last two decades. The available empirical evidence is inconclusive and its interpretation is complicated by econometric problems that have not been fully solved. This paper surveys the relevant literature, focusing on studies that estimate aggregate production functions or growth regressions, and extracts some tentative conclusions. On the whole, my reading of the evidence is that there are sufficient indications that public infrastructure investment contributes significantly to productivity growth, at least for countries where a saturation point has not been reached. The returns to such investment are probably quite high in early stages, when infrastructures are scarce and basic networks have not been completed, but fall sharply thereafter. Hence, appropriate infrastructure provision is probably a key input for development policy, even if it does not hold the key to rapid productivity growth in advanced countries where transportation and communications needs are already adequately served.
    Keywords: infrastructures, public capital, productivity
    JEL: H54 O47
    Date: 2010–06–02
  7. By: FUKAO Kyoji; ITO Keiko
    Abstract: Using factory-level data for Japanfs manufacturing sector, we estimate the relationship between the unit values of gross output and factor intensities. We find a significant and positive relationship between the unit value of a product and its white-collar labor intensity, which supports the assumption widely used in theoretical models that commodities with higher prices are of higher quality and more human capital-intensive. However, the relationship between the unit value of a product and its capital intensity is not always positive, and is significantly negative in some sectors. Using the results of the relationship between unit values and factor intensities, we also estimate the factor contents of Japanfs trade, taking account of differences in the unit values of exports and imports. We find that the number of non-production workers and the capital stock embodied in Japanfs net exports are under-estimated when differences in unit values are not taken into account.
    Date: 2010–06
  8. By: Joana C. Lima; Horácio C. Faustino
    Abstract: This study examines the evolution of Portuguese exports to Spain and its determinants in the period 2004-2008, based on a sample of the 97 largest exporters to Spain. The study uses various economic and financial indicators to characterize these companies and comparison is made between the sample’s five largest companies and five of the small and medium enterprises (SMEs). The analysis highlights the geographic concentration of companies in the districts of Porto and Aveiro and the better performance of large enterprises in terms of productivity, return on equity and average salary compared to SMEs. The econometric study, using panel data, considers as theoretically relevant explanatory variables the gross added value, net income, equity, the size of the company, the remuneration and expenditure on research and development (R&D). The results of the estimated model confirm the positive influence of these variables on the variation of exports, although the expenditure on R&D proved to be statistically insignificant.
    Keywords: enterprises, exports, panel data, economic and financial indicators, Portugal, Spain.
    Date: 2010–04
  9. By: Volodymyr Vakhitov (Kyiv School of Economics, Kyiv Economics Institute); Chris Bollinger (University of Kentucky)
    Abstract: We use establishment level longitudinal data to estimate agglomeration economies in the Ukraine for machine manufacturing and hi-tech industries. We differentiate state-owned, private-domestic-owned and private-internationally-owned firm types. Our baseline results are comparable to other firm level measures of similar industries and to other research in the former Soviet Union. We find that state owned firms accrue little or no agglomeration benefits, while privately-owned firms are able to take advantage of agglomeration effects. Foreign-owned firms may gain the most from agglomeration. These results suggest that agglomeration economies are typically gained at the management level.
    Keywords: Agglomeration, Localization Economies, Ownership Structure, Transition, Production Function
    JEL: O1 P2 R1 R3
    Date: 2010–05
  10. By: Panagiotis Liargovas; Spyridon Repousis
    Abstract: The Greek banking landscape has experienced substantial changes and restructuring since the mid 1990s. This paper examines the financial performance and the implications of Greek banks’ mergers and acquisitions that took place during the period 1996-2009. With the use of event study methodology, we reject the “semi-strong form” of Efficient Market Hypothesis (EMH) of the Athens Stock Exchange, possibly reflecting leakage of information. We find that ten days prior to the announcement of a merger and acquisition, shareholders receive considerable and significant positive cumulative average abnormal returns (CAARs), which are more significant in the case of cash deals compared to stock deals. Also the results show that significant positive CAARs are gained upon the announcement of horizontal and diversifying bank deals. The overall results (the weighted average of gains to the bidder and to the target bank) indicate that bank mergers and acquisitions have no impact and do not create wealth. We also examine operating performance by estimating twenty financial ratios. Findings show that operating performance does not improve, following mergers and acquisitions. There are also controversial results when comparing merged to non-merged banks. index.
    Keywords: Banks, M&As, Event Study, Operating Performance
    Date: 2010
  11. By: Roman, Monica
    Abstract: The economic success is more and more based on upon the effective utilization of intangible assets such as knowledge, skills and innovative potential as the key resource for competitive advantage. For transition countries, such as Romania and Bulgaria, the efficiency of research and development activities is particularly important, since technological progress is one of the core aspects of economic growth. In this article we describe the common features of the two countries, but also the existing differences in respect with knowledge based economy. There are significant regional differences within the countries and marginal regions must close the gap with more developed regions. The paper analyzes research efficiency at the regional level for NUTS2 regions from Romania and Bulgaria between 2003 and 2005, applying a DEA framework. Our main finding is that Bulgarian regions are more efficient in R&D activities compared to Romanian ones. The only Romanian efficient region is Bucuresti Ilfov, while the other two efficient regions are rather small Bulgarian regions, with fewer resources. They show a remarkably high level of research efficiency, whereas some of the larger regions (both from Romania and Bulgaria) lag behind.
    Keywords: regions knowledge economy transition countries efficiency DEA
    JEL: R58 P27 R11 O31
    Date: 2010–02

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