New Economics Papers
on Efficiency and Productivity
Issue of 2013‒08‒10
twelve papers chosen by

  1. Profit and cost efficiency in the Italian banking industry (2006-2011) By Aiello, Francesco; Bonanno, Graziella
  2. Social Efficiency in Peruvian Microfinance Institutions: a semi-parametric approach By Giovanna Aguilar; Jhonatan Claussen
  3. Does land fragmentation affect farm performance? A case study from Brittany By Latruffe, Laure; Piet, Laurent
  4. A Detailed Analysis of Newfoundland and Labrador's Productivity Performance, 1997-2010: The Impact of the Oil Boom By Andrew Sharpe; Etienne Grand'Maison
  5. The production function of top R&D investors: Accounting for size and sector heterogeneity with quantile estimations By Antonio Vezzani; Sandro Montresor
  6. Colombian bank efficiency and the role of market structure By Diana Fernández Moreno; Dairo Estrada
  7. Subsidies, Shadow of Death and Productivity By Koski, Heli; Pajarinen, Mika
  8. Regulation and the Crisis: The Efficiency of Italian Cooperative Banks By Cristian Barra; Sergio Destefanis; Giuseppe Lubrano Lavadera
  9. Environmental performance and quality of governance: A non-parametric analysis of the NUTS 1-regions in France, Germany and the UK By Halkos, George; Sundström, Aksel; Tzeremes, Nickolaos
  10. Do infrastructure reforms reduce the effect of corruption ? theory and evidence from Latin America and the Caribbean By Wren-Lewis, Liam
  11. Fatigue and Team Performance in Soccer: Evidence from the FIFA World Cup and the UEFA European Championship By Scoppa, Vincenzo
  12. Econometric Mediation Analyses: Identifying the Sources of Treatment Effects from Experimentally Estimated Production Technologies with Unmeasured and Mismeasured Inputs By James J. Heckman; Rodrigo Pinto

  1. By: Aiello, Francesco; Bonanno, Graziella
    Abstract: This study evaluates the cost and the profit efficiency of Italian banking sector over the period 2006-2011. Translog stochastic frontiers are used for this purpose. Following the intermediation approach, efficiency scores are computed from estimating a model with three inputs and three outputs. Results indicate that Italian banks perform well, given that the average levels of cost and profit efficiency are both around 90% and they are quite stable over time. However, there is high heterogeneity in results. Differences have been found when banks are classified by size (efficiency tends to decrease with size), legal type (cooperatives perform better than others) and area (the best performers are in the North East of the country).
    Keywords: Banking; Translog Stochastic Frontiers; Cost and Profit Efficiency
    JEL: C13 D01 G21
    Date: 2013–08–08
  2. By: Giovanna Aguilar (Departamento de Economía - Pontificia Universidad Católica del Perú); Jhonatan Claussen (Departamento de Economía - Pontificia Universidad Católica del Perú)
    Abstract: This study aims to assess the social efficiency of microfinance institutions (MFIs) —regulated and non-regulated— in Peru. Social efficiency is referred to the capacity of MFIs to produce more social outputs —number of poor clients and women served— without using more resources. The Data Envelopment Analysis methodology is used to carry on efficiency analysis. Additionally, we analyze the potential determinants of social efficiency of MFIs through a Tobit regression analysis in the context of panel data, in order to investigate whether differences related to the institutional nature of MFIs explain differences in social efficiency achieved by them. The study period covers the years from 2007 to 2011. The results show that non-regulated MFIs are socially more efficient. On the contrary, those MFIs which are within regulatory scheme, shown in most cases, distant positions to the efficient frontier. Regression analysis shows that being a regulated MFI negatively affects social efficiency levels, a greater presence in rural area positively affect social efficiency levels. Although there is evidence that financial returns could relate positively to social efficiency, this result does not seem to be as robust. At the other extreme, the lending technology does not seem to be relevant to explain social efficiency.
    Keywords: Microfinance, Social Efficiency, Efficiency frontiers, DEA analysis
    JEL: G21 O10 O16
    Date: 2013
  3. By: Latruffe, Laure; Piet, Laurent
    Abstract: Agricultural land fragmentation is widespread and may affect farmers’ decisions and impact farm performance, either negatively or positively. We investigated this impact for the western region of Brittany, France, in 2007. To do so, we regressed a set of performance indicators on a set of fragmentation descriptors. The performance indicators (production costs, yields, revenue, profitability, technical and scale efficiency) were calculated at the farm level using Farm Accountancy Data Network (FADN) data, while the fragmentation descriptors were calculated at the municipality level using data from the cartographic field pattern registry (RPG). The various fragmentation descriptors enabled us to account for not only the traditional number and average size of plots, but also their geographical scattering. We found that farms experienced higher costs of production, lower crop yields and lower profitability where land fragmentation (LF) was more pronounced. Total technical efficiency was not found to be significantly related to any of the municipality LF descriptors used, while scale efficiency was lower where the average distance to the nearest neighbouring plot was greater. Pure technical efficiency was found to be negatively related to the average number of plots in the municipality, with the unexpected result that it was also positively related to the average distance to the nearest neighbouring plot. By simulating the impact of hypothetical consolidation programmes on average pre-tax profits and wheat yield, we also showed that the marginal benefits of reducing fragmentation may differ with respect to the improved LF dimension and the performance indicator considered. Our analysis therefore shows that the measures of land fragmentation usually used in the literature do not reveal the full set of significant relationships with farm performance and that, in particular, measures accounting for distance should be considered more systematically.
    Date: 2013–04
  4. By: Andrew Sharpe; Etienne Grand'Maison
    Abstract: Propelled by the mining and oil and gas sector, Newfoundland and Labrador’s economy experienced impressive growth in the past decade. During the 1997-2010 period, real GDP in the province's business sector increased at nearly twice the rate of Canada's, while the province's labour productivity growth was more than three times greater than Canada's. This report provides a detailed analysis of Newfoundland and Labrador's labour, capital and multifactor productivity performance and the factors behind this performance. It identifies the province’s shift to high-productivity oil extraction activities as the main factor responsible for this remarkable productivity growth while also discussing the positive spill-over effects that this shift has had on Newfoundland and Labrador's economy as a whole.
    Date: 2013–07
  5. By: Antonio Vezzani (JRC-IPTS); Sandro Montresor (JRC-IPTS)
    Abstract: The paper investigates how top R&D investors differ in the production impact of their inputs and in their rate of technical change. We use the EU Industrial R&D Investment Scoreboard and perform a quantile estimation of an augmented Cobb-Douglass production function for a panel of more than 1,000 companies, covering the period 2002-2010. The results for the pooled sample are contrasted with those obtained from the estimates for different groups of economic sectors. Returns to scale are bounded by the initial size of the firm, but to an extent that decreases with the technological intensity of the sector. The output return of knowledge capital is the most important, irrespective of firm size, but in high-tech sectors only. Elsewhere, physical capital is the pivotal factor, although with size variations. The investigated firms appear different also in their technical progress: embodied in mid-high and low/mid-low tech sectors, and disembodied in high-tech sectors.
    Keywords: production function, R&D, firm and sector heterogeneity
    JEL: D24 D21 O30
    Date: 2013–07
  6. By: Diana Fernández Moreno; Dairo Estrada
    Abstract: Colombia’s financial system has undertaken major changes during the last decade, with new regulatory regimes being implemented, as well as a significant expansion of financial services. Nevertheless, the recent literature has yet to analyze this new epoch for banking institutions under an efficiency framework. Taking into account the availability of new information and the methodological advances of recent years, our purpose is to study the evolution of bank efficiency during the past few years, as well as to evaluate the influence of some market structure variables on the latter. We find evidence, both under SFA and Order-m, supporting an increase in efficiency over time. Moreover, relating the latter with market structure variables suggests that there is a positive relationship between market power and efficiency; this occurs due to product differentiation, which allows banks to gain in efficiency provided they don’t set excessive credit prices. Nonetheless, there is an open debate concerning the behavior of banks with the highest market shares, since the negative relation between market concentration and efficiency advocates for a "quiet life form", where banks don’t have incentives to fully minimize costs. Additional to these results, we provide evidence of potential impacts that mergers and credit specialization may have on efficiency.
    Keywords: Bank Efficiency, Concentration, Market Power, Stochastic Frontier Analysis, Order-m. Classification JEL: C14, D40, D61, G21
  7. By: Koski, Heli; Pajarinen, Mika
    Abstract: Our panel data from over 10,000 Finnish firms during the years 2003-2010 sheds light on the effect of different business subsidies on firm productivity performance and on the relationship between firms’ lagged labor productivity and market exit. We find that not any of the subsidy types have statistically significant short-term or longer term impacts on the firms’ productivity performance. It seems that particularly employment and investment subsidies tend to be allocated to the relatively less efficient companies. We further observe that a decline in the firm’s lagged labor productivity levels are clearly more weakly related to the subsidized firms’ exit than to the exit of firms that have not received any subsidies. Our empirical findings thus hint that the allocation of subsidies to the relatively inefficient firms increases their liquidity making their market exit less likely than it would be otherwise. In other words, our data indicate that subsidy allocation weakens the shadow of death phenomenon observed in the previous empirical studies and hinders the process of creative destruction in the economy.
    Keywords: productivity, business subsidies, firm exit, enterprise policy, technology policy
    JEL: D24 J23 L10 L53 O25
    Date: 2013–08–05
  8. By: Cristian Barra (Università di Salerno); Sergio Destefanis (Università di Salerno, CELPE and CSEF); Giuseppe Lubrano Lavadera (IRAT, CNR, Naples)
    Abstract: In this paper we analyze the impact of the current financial crisis on the determination of technical efficiency in a sample of Italian small banks, highlighting the interaction of the crisis with different regulatory regimes existing for cooperative banks (CB’s) and other banks. We find that the crisis has a negative impact on efficiency, more so for CB's. This is to be expected, as the CB's principle of external mutuality and their branching regulations are likely to locate them in less performing areas. In accordance with this prior, the differential impact of the crisis attenuates or vanishes when we include in the production set some indicators of local environment (GDP per capita). Correspondingly, we find novel evidence in favour of the “bad luck” hypothesis suggested by Berger and De Young (Journal of Banking and Finance, 1997).
    Keywords: Cooperative banks, Technical efficiency, Local shocks, Territorial diversification
    JEL: D24 G21 L89
    Date: 2013–07–30
  9. By: Halkos, George; Sundström, Aksel; Tzeremes, Nickolaos
    Abstract: This paper applies nonparametric estimators to examine the effect of regional quality of government on the environmental performance in the NUTS 1-regions in France, Germany and the UK. The most comprehensive existing regional measure on governance is used, gauging the partiality, corruption and effectiveness of government services in each region. By utilizing regional level measures of three pollutants (CO2, CH4 and N2O) the effect of governance on environmental efficiency is analyzed. The empirical analysis suggests that there is a nonlinear relationship between regions’ governance quality levels and their environmental performance. It appears that the effect of regional quality of governance is positive up to a certain level, then turning slightly negative. This suggests that higher governance quality will not always result in increased environmental efficiency.
    Keywords: Quality of governance; Environmental performance; Regions; Nonparametric analysis.
    JEL: C14 H23 Q50 Q58 R11
    Date: 2013–08–06
  10. By: Wren-Lewis, Liam
    Abstract: This paper investigates the interaction between corruption and governance at the sector level. A simple model illustrates how both an increase in regulatory autonomy and privatization may influence the effect of corruption. The interaction is analyzed empirically using a fixed-effects estimator on a panel of 153 electricity distribution firms across 18 countries in Latin America and the Caribbean from 1995--2007. Greater corruption is associated with lower firm labor productivity, but this association is reduced when an independent regulatory agency is present. These results survive a range of robustness checks, including instrumenting for regulatory governance, controlling for a large range of observables, and using several different corruption measures. The association between corruption and productivity also appears weaker for privately owned firms compared to publicly owned firms, though this result is somewhat less robust.
    Keywords: Public Sector Corruption&Anticorruption Measures,National Governance,Governance Indicators,Banks&Banking Reform,Economic Theory&Research
    Date: 2013–08–01
  11. By: Scoppa, Vincenzo (University of Calabria)
    Abstract: We investigate the role of fatigue in soccer (football). Although this issue is important for the "productivity" of players and the optimal organization of national and international championships, empirical evidence is lacking. We use data on all the matches played by national teams in all the tournaments of the FIFA Soccer World Cup (from 1930 to 2010) and the UEFA European Football Championship (from 1960 to 2012). We relate team performance (in terms of points gained and goals scored and conceded) to the respective days of rests that teams have had after their previous match, controlling for several measures of teams' abilities. Using different estimators we show that, under the current structure of major international tournaments, there are no relevant effects of enjoying different days of rest on team performance. However, we find that before Nineties days of rest had a positive impact on performance, presumably because athletic preparation of players was less effective. Furthermore, we show that the advantage of additional rest is quite relevant, when rest time of one of the opposing teams is three days or less.
    Keywords: sports economics, soccer, fatigue, team performance, World Cup, European Football Championship
    JEL: L83 J4 J22 L25 C29
    Date: 2013–07
  12. By: James J. Heckman (University of Chicago); Rodrigo Pinto (University of Chicago)
    Abstract: This paper presents an econometric mediation analysis. It considers identification of production functions and the sources of output effects (treatment effects) from experimental interventions when some inputs are mismeasured and others are entirely omitted.
    Keywords: Production Function, Mediation Analysis, Measurement Error, Missing Inputs
    JEL: D24 C21 C43 C38
    Date: 2013–08

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