New Economics Papers
on Efficiency and Productivity
Issue of 2011‒04‒09
twelve papers chosen by

  1. Scale and Technical Efficiency of Islamic Banks in Sudan: Data Envelopment Analysis By Onour, Ibrahim; Abdalla, Abdelgadir
  2. Technical efficiency analysis of banks in major oil exporting Middle East countries By Onour, Ibrahim; Abdalla, Abdelgadir
  3. Portugal and Spain: catching up and falling behind. A comparative analysis of productivity trends and their causes, 1980-2007 By Ester Gomes da Silva
  4. The Exporter Productivity Premium along the Productivity Distribution: Evidence from Unconditional Quantile Regression with Firm Fixed Effects By David Powell; Joachim Wagner
  5. Evidence of Competition in Research Activity among Economic Department using Spatial Econometric Techniques By J. Paul Elhorst; Katarina Zigova
  6. Management Matters in New Zealand: How Does Manufacturing Measure Up? By Green, Roy; Agarwal, Renu
  7. Performance assessment of Russian homeowners associations : The importance of being social By Polishchuk, Leonid; Borisova, Ekaterina
  8. A Stochastic Frontier Model with short-run and long-run inefficiency random effects By Roberto Colombi; Gianmaria Martini; Giorgio Vittadini
  9. Gender Discrimination and Firm Profit Efficiency:Evidence from Brazil By Wenjun Liu; Tomokazu Nomura; Shoji Nishijima
  10. Echanching Productivity: Towards an Updated Action Agenda By Procter, Roger
  11. Is infrastructure capital productive? A dynamic heterogeneous approach By César Calderón; Enrique Moral-Benito; Luis Servén
  12. Main bank power, switching costs, and firm performance. Evidence from Ukraine, By Andreas Stephan; Oleksandr Talavera; Andriy Tsapin

  1. By: Onour, Ibrahim; Abdalla, Abdelgadir
    Abstract: This paper employs several efficiency measures and productivity changes using Data Envelopment Analysis (DEA) to investigate efficiency performance of Islamic banks in Sudan. Our results indicate, among twelve banks included in our sample only two banks, (the largest bank in the group which is government owned, and middle sized, private bank), score technical efficiency level (i.e. scale and pure technical efficiency). While the smallest bank in the group (private owned), score pure technical efficiency (i.e., managerial efficiency), but scale inefficient. This result adds additional evidence to the existing literature that ownership (government versus private) is not a constraint of managerial and scale efficiency but bank’s size is important factor for scale efficiency.
    Keywords: DEA;Banks efficiency;scale efficiency
    JEL: C44 C02 C15
    Date: 2010–11–14
  2. By: Onour, Ibrahim; Abdalla, Abdelgadir
    Abstract: This paper investigates efficiency performance of thirty six banks operating in Gulf Cooperation Council (GCC) countries during the period 2006-2008 . Our results indicate in general GCC banks showed considerable pure technical efficiency in the past three years with the year 2007 exhibit the most efficient year, as the number of pure technical efficient banks reached 33 percent of the total banks compared to 25 percent in 2008. The fall in technical efficiency in 2008 is due to simultaneous fall in pure technical efficiency and the scale efficiency. The output loss caused by scale inefficiency (fall of scale operations below optimum level) in 2008 is estimated 16 percent compared to 5 percent in 2007. Our results also indicate scale efficiency is inversely related to banks' size implying a major source of scale inefficiency in GCC banks is due to sub-optimal size of operations. It is also indicated in the paper that scale efficiency is inversely related to risk, implying effective risk management policies may also enhance scale efficiency.
    Keywords: technical efficiency;scale efficiency;DEA
    JEL: C44 C63 C61
    Date: 2011–01–25
  3. By: Ester Gomes da Silva (Faculdade de Letras/ISFLUP, CEF.UP, Universidade do Porto)
    Abstract: A number of studies in the literature have recently explored the causes behind the European productivity slowdown from the mid-1990s onwards and the correlative increase in the productivity gap between Europe and the United States (e.g., van Ark et al, 2008; Maudos et al, 2008; van Ark and Inklaar, 2005). Much less attention has been given, however, to the specific role of the EU peripheral countries in the process. In this paper we focus on the growth performances of two of such countries: Portugal and Spain. After a period of successful catch-up relative to the EU core, the two countries, which have a number of historical and economic features in common, have recently faced increasing difficulties in closing the gap to the EU. In the last decade, Spain has shown one of the worst productivity growth records among EU-members, whereas Portugal remained quite distant from European average productivity levels, and has increased the gap in per capita income levels. In this paper an attempt is made to shed light on the causes behind the overall disappointing performance of both countries, by focusing on the role of structural change on the process. An extensive literature, from both mainstream and more heterodox streams of research, suggests that sectoral specialization may have a major impact on productivity growth, by influencing the extent to which innovation and technological progress can be achieved. In order to account for these effects, an analysis of productivity trends both at the macroeconomic and industry levels of analysis is undertaken, using growth accounting and shiftshare techniques. The analysis is based on data from the EU-KLEMS database for Spain and the EU-core, and on an update and refinement of Silva´s (2010) labor and multifactor productivity estimates for Portugal. By investigating the different sources of productivity growth between 1980 and 2007, it is argued that an important factor explaining the growth difficulties in both countries is related to their difficulties in promoting important changes in their economic structures. In particular, the recent deterioration of economic growth may be seen as reflecting their incapacity in making a strong leap towards a more ‘modern’ industry structure.
    Keywords: Productivity, Economic growth, Structural change, Technology
    JEL: O47 O14 O57
    Date: 2011–03
  4. By: David Powell; Joachim Wagner
    Abstract: One of the stylized facts from the literature on international activities of heterogeneous firms is the existence of a positive exporter productivity premium - on average, exporting firms are more productive than firms that sell on the national market only. In this paper, the authors look at the productivity distribution of both exporting and non-exporting firms in German manufacturing industries. They recognize that it is potentially important to condition on firm fixed effects for estimation of this exporter premium. They apply a new unconditional quantile estimation technique for panel data to condition on firm fixed effects while estimating the exporter premium throughout the entire productivity distribution. They find that the premium is positive for all productivity levels, but highest at the lowest quantiles. These results support theoretical models which suggest that there is a division in productivity between exporters and non-exporters. Mean regression is incapable of detecting this dimension of firm heterogeneity.
    Keywords: exporter productivity premium, quantile regression, fixed effects, unconditional quantile treatment effects
    JEL: F14 C21 C23
    Date: 2011–02
  5. By: J. Paul Elhorst (Faculty of Economics and Business, University of Groningen, The Netherlands); Katarina Zigova (Department of Economics, University of Konstanz, Germany)
    Abstract: Despite the prevalence of both competitive forces and patterns of collaboration within academic communities, studies on research productivity generally treat universities as independent entities. By exploring the research productivity of all academic economists employed at 81 universities and 17 economic research institutes in Austria, Germany, and German-speaking Switzerland, this study determines whether a research unit’s productivity depends on that of neighboring research units. The significant negative relationship that is found implies competition for priority of discovery among individual researchers, as well as the universities and research institutes that employ them. In addition, the empirical results support the hypotheses that collaboration and the existence of economies of scale increase research productivity.
    Keywords: Research productivity, Competition, Collaboration, Negative spatial autocorrelation, Geo-referenced point data
    JEL: C21 D85 I23 J24 R12
    Date: 2011–03–29
  6. By: Green, Roy (University of Technology Sydney); Agarwal, Renu (University of Technology Sydney)
    Abstract: This paper benchmarks management practices in New Zealand manufacturing firms against the global best. The project was undertaken by a research team from the University of Technology Sydney and is part of a world-wide study led by the London School of Economics and McKinsey & Co. The findings suggest that while some of New Zealand’s firms are as good as any in the world, there is a substantial ‘tail’ of firms that are mediocre, especially in their approach to people management. This is a key differentiating factor between New Zealand and better performing, more innovative countries, and it echoes similar recent findings for Australian manufacturers. The research findings also suggest that there is a link between the quality of management – scored across 18 dimensions of people, performance and operations – and enterprise productivity. This study suggests that New Zealand manufacturing firms need to improve the management performance to build longer-term competitive advantage. It reveals that some management practices represent opportunities for improvement for these manufacturing firms. The study demonstrates that a cost-effective way of improving the productivity performance of New Zealand firms is to promote a transformation in the calibre of the management and leadership of its organisations. This is the key to a more innovative, dynamic and sustainable economy into the future.
    Keywords: Management practices; productivity
    JEL: L20 M20
    Date: 2011–03–30
  7. By: Polishchuk, Leonid; Borisova, Ekaterina
    Abstract: Performance of Russian homeowners associations – non-profits established to manage common property in residential housing – is assessed using the stochastic frontier technique, which is a powerful tool of productivity analysis. Performance variations are explained by physical and social factors, prominent among them is the availability of social capital among tenants, required to resolve collective action problems and ensure accountability of managing bodies and outside contractors. Lack of civic capacity could be an obstacle to implementing community-governance solutions in residential housing, making homeowners associations dysfunctional or prone to capture by vested interests.
    Keywords: homeowners associations; non-profit organizations; common property; stochastic frontier; social capital
    JEL: P25 L31 C01
    Date: 2010–07
  8. By: Roberto Colombi; Gianmaria Martini; Giorgio Vittadini
    Abstract: This paper presents a new stochastic frontier model for panel data. The model takes into account firm unobservable heterogeneity and short-run and long-run sources of inefficiency. Each of these features is modeled by a specific random effect. In this way, firms’ latent heterogeneity is not wrongly modeled as inefficiency, and it is possible to disentangle a time-persistent component from the total inefficiency. Under reasonable assumptions, we show that the closed-skew normal distribution allows us to derive both the log-likelihood function of the model and the posterior expected values of the random effects. The new model is compared with nested models by analyzing the efficiency of firms belonging to different sectors.
    Keywords: Closed-Skew Normal Distribution, Longitudinal Data Analysis, Mixed Models, Stochastic Frontiers
    Date: 2011
  9. By: Wenjun Liu (Graduate School of Economics, Kobe University); Tomokazu Nomura (Graduate School of Economics, Kobe University); Shoji Nishijima (Research Institute for Economics and Business Administration, Kobe University)
    Abstract: In this study, we investigated discrimination against women within the Brazilian labor market using firm-level data and considering the proportion of female employees as a proxy for the extent of discrimination. Estimating the profit efficiency of firms using data envelopment analysis, and regressing it on the proportion of female employees and other firm characteristics, we found that the proportion of female employees is positively correlated with firm profit efficiency. Our finding indicates that firms employing a high proportion of female workers incur a lower labor cost while producing the same level of output compared to firms employing a low proportion of female employees, and provide strong evidence of the existence of discrimination against female employees within the Brazilian labor market.
    Date: 2011–03
  10. By: Procter, Roger (Ministry of Economic Development, New Zealand)
    Abstract: This paper presents an explanation of how the dynamic but uncertain process of economic development and growth occurs. It shows that economic development leads to structural change, an enhancement of capabilities and path dependence in the economy. It examines three different approaches to understanding the performance of the New Zealand economy and shows that performance of the New Zealand economy is consistent with its structure and sophistication. It suggests areas where policy might be developed to enhance New Zealand’s economic performance, and argues that both improvements in framework policies and enhancement of facilitative policies will be required to improve New Zealand’s economic performance. However, the development of specific policies is left for later work.
    Keywords: Economic growth; New Zealand; productivity; development; innovation; trade; structural change; industry policy
    JEL: B52 O10 O20 O31 O32 O38
    Date: 2011–03–30
  11. By: César Calderón (The World Bank); Enrique Moral-Benito (Banco de España); Luis Servén (The World Bank)
    Abstract: This paper offers an evaluation of the output contribution of infrastructure. Drawing from a large data set of infrastructure stocks covering 88 countries and spanning the years 1960-2000, and using a panel time-series approach, the paper estimates a long-run aggregate production function relating GDP to human capital, physical capital, and a synthetic measure of infrastructure given by the first principal component of infrastructure endowments in transport, power and telecommunications. Tests of the cointegration rank allowing it to vary across countries reveal a common rank with a single cointegrating vector, which we interpret as the long-run production function. Estimation of its parameters is performed using the pooled mean group (PMG) estimator, which allows for unrestricted short-run parameter heterogeneity across countries while imposing the (testable) restriction of long-run parameter homogeneity. The long-run elasticity of output with respect to the synthetic infrastructure index ranges between 0.07 and 0.10. The estimates are highly significant, both statistically and economically, and robust to alternative dynamic specifications and infrastructure measures. There is little evidence of long-run parameter heterogeneity across countries, whether heterogeneity is unconditional, or conditional on their level of development, population size, or infrastructure endowments.
    Keywords: Infrastructure, panel cointegration, parameter heterogeneity
    JEL: H54 E23 O40
    Date: 2011–03
  12. By: Andreas Stephan (Jonkoping International Business School); Oleksandr Talavera (School of Economics, University of East Anglia); Andriy Tsapin (Ostroh Academy)
    Abstract: We examine firms’ motivation to change their main bank and how this switch affects loans, interest payments and firm performance after switching. Applying treatment effect analysis on unique firm-bank matched Ukrainian data, we find that larger and highly leveraged companies are more likely to switch their main bank. Importantly, firms tend to switch to a new main bank which holds a higher share of equity in the firm and thereby has stronger power. The results also suggest that firms after switching obtain additional access to bank loans but have on average lower profits due to increased interest payments.
    Keywords: switching, main bank power, firm performance, Ukraine
    JEL: G21 G30 G32
    Date: 2011–03–28

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.