New Economics Papers
on Efficiency and Productivity
Issue of 2010‒09‒18
ten papers chosen by

  1. An epsilon-based measure of efficiency in DEA revisited -A third pole of technical efficiency By Kaoru Tone; Miki Tsutsui
  2. Plant Size, Turnover and Productivity in Malaysian Manufacturing By Ergun Dogan; Koi Nyen Wong
  3. Turnover, Ownership and Productivity in Malaysian Manufacturing By Ergun Dogan; Koi Nyen Wong; Michael Meow-Chung Yap
  4. Product Switching and Firm Performance in Japan By KAWAKAMI Atsushi; MIYAGAWA Tsutomu
  5. The Determinants Of the Technical Efficiency of Cotton Farmers in Northern Cameroon By Neba, Cletus; Ngassam, Sylvain; Nzomo, Joseph
  6. Energy demand and energy efficiency in the OECD countries: a stochastic demand frontier approach By Massimo Filippini; Lester C Hunt
  7. Nonparametric Frontier Estimation from Noisy Data By Florens, Jean-Pierre; Schwarz, Maik; Van Bellegem, Sébastien
  8. Market concentration in the banking sector: Evidence from Albania By Tushaj, Arjan
  9. Panel Data Estimates of the Production Function and Product and Labor Market Imperfections By Dobbelaere, Sabien; Mairesse, Jacques
  10. Evaluating the Effects of Deposit Dollarization in Bank Profitability By Ali M. Kutan; Erick W. Rengifo; Emre Ozsoz

  1. By: Kaoru Tone (National Graduate Institute for Policy Studies); Miki Tsutsui (Central Research Institute of Electric Power Industry)
    Abstract: In DEA, we have two measures of technical efficiency with different characteristics: radial and non-radial. In this paper we compile them into a composite model called “epsilon-based measure (EBM).” For this purpose we introduce two parameters which connect radial and non-radial models. These two parameters are obtained from the newly defined affinity index between inputs or outputs along with principal component analysis on the affinity matrix. Thus, EBM takes into account diversity of input/output data and their relative importance for measuring technical efficiency.
    Keywords: Data envelopment analysis, Radial, Non-radial, CCR, SBM, EBM, Principal component analysis
    Date: 2010–02
  2. By: Ergun Dogan; Koi Nyen Wong
    Abstract: Malaysian manufacturing has an asymmetrical structure: small and medium-sized enterprises dominate in numbers, but contribute relatively little to total output, employment, and exports as compared to their larger counterparts. In light of an increasingly competitive environment arising from globalization, a sound knowledge of turnover patterns within the sector by plant size and its potential impact on aggregate productivity growth is imperative. We find that turnover, particularly of large plants, makes a substantial contribution to overall productivity growth in manufacturing. Hence, from a policy perspective, facilitating turnover might be as important as supporting existing plants in promoting aggregate productivity growth
    Keywords: Plant turnover; plant size; productivity; manufacturing; Malaysia
    JEL: D24 F14 L60 O12
    Date: 2010–05
  3. By: Ergun Dogan; Koi Nyen Wong; Michael Meow-Chung Yap
    Abstract: Applying Foster, Haltiwanger and Krizan‟s (1998) decomposition of productivity growth method to Malaysian manufacturing census data for 2000 and 2005, we analyse if firm turnover by ownership (domestic versus foreign) has any impact on the sector‟s aggregate productivity growth. The findings show that turnover matters regardless of ownership but, more importantly, attracting foreign direct investment inflows could induce positive „net entry effect‟. The manufacturing sector‟s heavy dependence on FDI is underscored by the significant contribution of large MNCs to export value. Foreign entrants also have an important positive impact on sector productivity. The analysis shows that large-sized foreign and domestic entrants are more productive than medium-sized and especially small-sized ones. Among survivors, large foreign and domestic establishments fare the worst. Mediumsized domestic survivors, on the other hand, contribute the most to boosting sector productivity. The study demonstrates the usefulness of such an analytical framework by drawing out important implications for state industrial policies based on ownership and firm size.
    Keywords: Ownership, firm turnover; productivity; manufacturing; Malaysia
    JEL: D24 F14 L60 O12
    Date: 2010–05
  4. By: KAWAKAMI Atsushi; MIYAGAWA Tsutomu
    Abstract: Following Bernard, Redding and Schott (2010), we have constructed product and firm level data on Japanese manufacturing firms using the Census of Manufactures. Employing this data, we have found that multiple-product firms show better performance than single-product firms and product switching behavior in incumbent firms leads to greater output growth in the Japanese manufacturing sector, more so than in entry and exit. Empirical studies at industry level show that an unregulated, competitive environment stimulates product switching. At firm level, labor productivity growth and an unregulated, competitive environment encourage product switching behavior. Such product switching behavior improves firm performance in the areas of output, employment and labor productivity, etc.
    Date: 2010–09
  5. By: Neba, Cletus; Ngassam, Sylvain; Nzomo, Joseph
    Abstract: This paper, seeks to evaluate the technical efficiency of cotton farms in the northern part of Cameroon through the use of a parametric production frontier. The evaluation approach used is a stochastic type which shows that in spite of the fact that cotton yields in Cameroon are amongst the highest in sub-Saharan Africa, efficiency indexes are still as low as 60% in average. Having had a diagnosis overview aimed at identifying the determinant of technical efficiency with the use of a regression function, the main findings show that the characteristics of the producer as well as environmental factors all influence technical efficiency.
    Keywords: technical efficiency; cotton farms; northern Cameroon
    JEL: D24 Q12
    Date: 2010–06–16
  6. By: Massimo Filippini (Centre for Energy Policy and Economics (cepe), ETH Zurich and Department of Economics, University of Lugano); Lester C Hunt (Surrey Energy Economics Centre (SEEC), Department of Economics, University of Surrey)
    Abstract: This paper attempts to estimate a panel ‘frontier’ whole economy aggregate energy demand function for 29 countries over the period 1978 to 2006 using parametric stochastic frontier analysis (SFA). Consequently, unlike standard energy demand econometric estimation, the energy efficiency of each country is also modelled and it is argued that this represents a measure of the underlying efficiency for each country over time, as well as the relative efficiency across the 29 OECD countries. This shows that energy intensity is not necessarily a good indicator of energy efficiency, whereas by controlling for a range of economic and other factors, the measure of energy efficiency obtained via this approach is. This is, as far as is known, the first attempt to econometrically model OECD energy demand and efficiency in this way and it is arguably particularly relevant in a world dominated by environmental concerns with the subsequent need to conserve energy and/or use it as efficiently as possible. Moreover, the results show that although for a number of countries the change in energy intensity over time might give a reasonable indication of efficiency improvements; this is not always the case. Therefore, unless this analysis is undertaken, it is not possible to know whether the energy intensity of a country is a good proxy for energy efficiency or not. Hence, it is argued that this analysis should be undertaken to avoid potentially misleading advice to policy makers.
    Keywords: Energy demand; OECD; efficiency and frontier analysis; energy efficiency
    JEL: D D2 Q Q4 Q5
    Date: 2010–07
  7. By: Florens, Jean-Pierre; Schwarz, Maik; Van Bellegem, Sébastien
    Abstract: A new nonparametric estimator of production a frontier is defined and studied when the data set of production units is contaminated by measurement error. The measurement error is assumed to be an additive normal random variable on the input variable, but its variance is unknown. The estimator is a modification of the m-frontier, which necessitates the computation of a consistent estimator of the conditional survival function of the input variable given the output variable. In this paper, the identification and the consistency of a new estimator of the survival function is proved in the presence of additive noise with unknown variance. The performance of the estimator is also studied through simulated data.
    Date: 2010–05
  8. By: Tushaj, Arjan
    Abstract: The market structure can be described by concentration ratios based on the oligopoly theory or the structure - conduct - performance paradigm. Measures of concentration and also competition are essential for banks conduction in the banking industry. Several researchers have proved concentration level to be major determinants of banking system efficiency. Theoretical characteristics of market concentration measures are illustrated with empirical evidence. The market structure of the Albanian Banking Sector has changed dramatically in recent years. On 1990s, our country has experienced deregulation, foreign bank penetration, and an accelerated process of consolidation and competition in the banking sector. Particularly, the working paper examines the nature and the extent of changes in market concentration of Albanian banking sector. It focused primarily on a descriptive and dynamic analysis of change in the concentration indices in banking sector from year to year. Also it examines how the inherited structure of the banking system affects the way of the distribution of market shares amongst the different banks that comprise on the banking sector. --
    Keywords: Bank Concentration,Concentration ratios,HHI index,Market Structure
    JEL: A20
    Date: 2010
  9. By: Dobbelaere, Sabien (VU University Amsterdam); Mairesse, Jacques (CREST-INSEE)
    Abstract: Consistent with two models of imperfect competition in the labor market, the efficient bargaining model and the monopsony model, we provide two extensions of a microeconomic version of Hall's framework for estimating price-cost margins. We show that both product and labor market imperfections generate a wedge between factor elasticities in the production function and their corresponding shares in revenue that can be characterized by a "joint market imperfections parameter". Using an unbalanced panel of 10646 French firms in 38 manufacturing industries over the period 1978-2001, we can classify these industries into six different regimes depending on the type of competition in the product and the labor market. By far the most predominant regime is one of imperfect competition in the product market and efficient bargaining in the labor market (IC-EB), followed by a regime of imperfect competition in the product market and perfect competition or right-to-manage bargaining in the labor market (IC-PR), and by a regime of perfect competition in the product market and monopsony in the labor market (PC-MO). For each of these three predominant regimes, we assess within-regime firm differences in the estimated average price-cost mark-up and rent-sharing or labor supply elasticity parameters, following the Swamy methodology to determine the degree of true firm dispersion. As a way to assess the plausibility of our findings in the case of the dominant regime (IC-EB), we also relate our industry and firm-level estimates of price-cost mark-up and (relative) extent of rent sharing to industry characteristics and firm-specific variables respectively.
    Keywords: rent sharing, monopsony, price-cost mark-ups, production function, panel data
    JEL: C23 D21 J51 L13
    Date: 2010–09
  10. By: Ali M. Kutan (Southern Illinois University, Department of Economics and Finance); Erick W. Rengifo (Fordham University, Department of Economics); Emre Ozsoz (Fordham University, Department of Economics)
    Abstract: Dollar-denominated deposits constitute a large proportion of deposits in many developing economies. This may result in currency mismatches on banks' balance sheets as is suggested by recent literature. In general, having dollar-denominated deposits and loans could increase financial fragility, create balance sheet problems and affect bank profitability. In particular, this currency mismatch does not only increase banks' currency risk when the proportion of dollar-denominated loans with respect to local-denominated loans increases but also it increases their clients' default risk if depreciation occurs. This paper investigates the profitability of 36 dollarized banking systems. Our results suggest that after controlling for some macroeconomic and institutional variables, dollarization, as currency mismatch hypothesis suggests, depresses bank performance and lowers bank profitability.
    Keywords: Dollarization, bank performance, bank profitability
    JEL: F31 G21
    Date: 2010

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