|
on Efficiency and Productivity |
|
Issue of 2014‒05‒04
fourteen papers chosen by |
| By: | Hagos, Hosaena Ghebru; Holden, Stein |
| Abstract: | Taking advantage of a unique quasi-experi-mental survey design, this study analyzes the productivity impacts of the Ethiopian land certification program by identify-ing how the investment effects (technological gains) would measure up against the benefits from any improvements in input use intensity (technical efficiency). For this purpose, we adopted a data envelopment analysis-based Malmquist-type productivity index to decompose productivity differences into (1) within-group farm efficiency differences, reflecting the technical efficiency effect, and (2) differences in the group production frontier, reflecting the long-term investment (technological) effects. The results show that farms without a land use certificate are, on aggregate, less productive than those with formalized use rights. |
| Keywords: | Land rights, Land ownership, productivity, land certification, data envelopment analysis, Malmquist index, quasi experimental design, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:esspwp:64&r=eff |
| By: | Ghosal, Vivek (Georgia Institute of Technology (Atlanta), European Business School Wiesbaden, and CESifo, Munich.); Stephan, Andreas (The Ratio Institute); Weiss, Jan (Jönköping International Business School) |
| Abstract: | Using a unique plant-level dataset we examine green productivity growth in Sweden’s heavily regulated pulp and paper industry, which has historically been a significant contributor to air and water pollution. Our exercise is interesting as Sweden has a unique regulatory structure where plants have to comply with national environmental regulatory standards and enforcement, along with decentralised plant-specific regulations. In our analysis, we use the sequential Malmquist-Luenberger productivity index which accounts for air and water pollutants as undesirable outputs. Some of our key findings are: (1) regulation has stimulated technical change related to pollution control, and has induced plants to catch up with the best-practice technology frontier with regard to effluent abatement; (2) large plants are more heavily regulated than small plants; (3) plants in environmentally less sensitive areas or those with local importance as employer face relatively lenient regulatory constraints; (4) environmental regulations trigger localized knowledge spillovers between nearby plants, boosting their green TFP growth. |
| Keywords: | TFP; DEA; Sequential Malmquist-Luenberger productivity index; pulp and paper industry; pollution; environmental regulations; enforcement; plant-specific regulation; productivity; Porter hypothesis. |
| JEL: | D24 L51 L60 Q52 Q53 Q58 |
| Date: | 2014–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0229&r=eff |
| By: | Barra, Cristian; Zotti, Roberto |
| Abstract: | This paper applies a data envelopment analysis (DEA) method to assess technical efficiency of both private and public universities in Italy. Moving from the traditional context where inputs and outputs are assumed to be non-negative, a directional distance function approach has been applied in order to handle both desirable (i.e. number of graduates) and undesirable (i.e. number of dropouts) outputs. The findings based on a panel from academic year 2003/2004 to 2007/2008 reveal the presence of interesting geographical (both by macro areas and regions) and ownership (private, public) effects. Several quality and quantity proxies have also been used in order to check whether the estimates depend on the output specification. Finally, the possible evidence of variation in the universities’ performances by subject of study has been taken into account in order to check whether the results are still consistent comparing universities within subject rather than across subjects. |
| Keywords: | Data envelopment analysis; Negative data in DEA; Directional distance function; Higher education |
| JEL: | C14 C67 I21 I23 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55570&r=eff |
| By: | Diego Prior (Department of Business, Universitat Autònoma de Barcelona, Spain); Emili Tortosa-Ausina (IVIE, Valencia and Department of Economics, Universidad Jaume I, Castellón, Spain); Manuel Illueca (IVIE, Valencia and Department of Finance and Accounting, Universidad Jaume I, Castellón, Spain); Mª Pilar GarcÃa-Alcober (Department of Economics and business, Universidad CEU-Cardenal Herrera, Valencia, Spain) |
| Abstract: | The analysis of efficiency and productivity in banking has received a great deal of attention for almost three decades now. However, most of the existing literature to date has not explicitly accounted for risk when measuring efficiency. We propose an analysis of profit efficiency taking into account how the inclusion of a variety of bank risk measures might bias efficiency scores. Our measures of risk are partly inspired by the literature on earnings management and earnings quality taking into account that loan loss provisions, as a generally accepted proxy for risk,can be adjusted to manage earnings and regulatory capital. We also consider some variants of traditional models of profit efficiency where different regimes are stipulated so that financial institutions can be evaluated in different dimensions—i.e. prices, quantities, or prices and quantities simultaneously. We perform this analysis on the Spanish banking industry, whose institutions are deeply affected by the current international financial crisis, and where re-regulation is taking place. Our results can be explored in multiple dimensions but, in general, they indicate that the impact of earnings management on profit efficiency is of less magnitude than what might be a priori expected, and that the performance of savings banks has been generally worse than that of commercial banks. However, the former firms are adapting to the new regulatory scenario and catching up with commercial banks rapidly, especially in some dimensions of performance. |
| Keywords: | bank, efficiency, loan loss provision, profit, risk |
| JEL: | C14 C61 G21 L50 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2014/11&r=eff |
| By: | Diego A. Restrepo-Tobón; Subal C. Kumbhakar |
| Abstract: | This paper presents new evidence regarding the relation between profit, revenue, and cost efficiencies of U.S. commercial banks. Building on the widely used nonstandard profit function (NSPF) approach, we show (i) why estimation of NSPF would be wrong and (ii) how revenue and cost efficiencies contribute to profit efficiency. Using data from U.S. comercial banks from 2001 to 2010, we find that losses due to profit inefficiency represents about 8.2% of banks’ equity of which 3.5% is due to revenue inefficiency and 4.7% to cost inefficiency. Cost efficiency weighs more than revenue efficiency in estimated profit efficiency. However, compared with cost inefficiency, revenue inefficiency affects more overall profitability. |
| Keywords: | Pro?t Ef?ciency; Revenue ef?ciency; Cost ef?ciency; Nonstandard Pro?t Function; Stochastic Frontier |
| JEL: | D24 G21 L13 |
| Date: | 2013–08–05 |
| URL: | http://d.repec.org/n?u=RePEc:col:000122:010939&r=eff |
| By: | M» Pilar Garc’a-Alcober (Department of Economics and business, Universidad CEU-Cardenal Herrera, Valencia, Spain); Emili Tortosa-Ausina (IVIE, Valencia and Department of Economics, Universidad Jaume I, Castell—n, Spain); Diego Prior (Department of Business, Universitat Aut˜noma de Barcelona, Spain); Manuel Illueca (IVIE, Valencia and Department of Finance and Accounting, Universidad Jaume I, Castell—n, Spain) |
| Abstract: | The literature analyzing the efficiency of financial institutions has evolved rapidly over the last twenty years. Most research has focused on the input side, analyzing either cost, input technical efficiency or input allocative efficiency, whereas comparatively fewer studies have examined the revenue side. However, both sides are relevant when evaluating banksÕ performance. This article explicitly explores how serious it may be to confine the analysis to one side of banksÕ activities only, comparing the efficiencies yielded by either minimizing costs or maximizing revenues. We focus on the Spanish banking sector, which is currently undergoing a profound process of change and restructuring. The application shows how severely biased the analysis is when only a partial efficiency measurement is conducted. It also shows the growing relevance of the issue since the beginning of the financial crisis. |
| Keywords: | bank, cost efficiency, revenue efficiency, kernel smoothing |
| JEL: | C14 C61 G21 L50 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2014/12&r=eff |
| By: | Pointon, Charlotte (Cardiff Business School); Matthews, Kent (Cardiff Business School) |
| Abstract: | The English and Welsh water and sewerage industry is characterised by indivisible capital which has a long service life. Previous studies of efficiency of the English and Welsh water and sewerage industry take a static framework, assuming all inputs can be adjusted instantaneously. This paper measures efficiency dynamically by incorporating intertemporal links of capital within the production function for the English and Welsh water and sewerage industry for the period 1996-2011. Dynamic DEA considers capital as a quasi-fixed input and is modelled as a contemporaneous output into current production and an input from past production. The results show that the inadequate intertemporal allocation of quasi-fixed inputs is the largest contributor of inefficiency and the ignorance of intertemporal effects leads to an over-estimation of allocative inefficiency. |
| Keywords: | Dynamic efficiency; water and sewage industry; DEA; intertemporal allocation |
| JEL: | D24 L23 L31 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2014/2&r=eff |
| By: | Halkos, George; Tzeremes, Nickolaos; Kourtzidis, Stavros |
| Abstract: | This study examines the efficiency of banking systems in seventeen OECD countries over the period 1999-2009. For the purpose of our analysis we introduce a window-based version of two relational two-stage DEA models. Furthermore, we apply different versions of the additive and the multiplicative decomposition approaches in order to capture the trends of the efficiencies over the examined period. The robust version of the proposed models enables us to treat deposits as an intermediate variable and therefore be able to link the “value added activity” stage with the “profitability” stage over time. Our findings reveal similarities among the results of the two models. Finally, the estimated efficiencies appear to have minor fluctuations indicating a stability of the examined banking systems over time. |
| Keywords: | Relational two-stage DEA; Window analysis; Banking systems. |
| JEL: | C61 C67 G21 |
| Date: | 2014–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55671&r=eff |
| By: | Vandercasteelen, Joachim; Dereje, Mekdim; Minten, Bart; Taffesse, Alemayehu Seyoum |
| Keywords: | technology, yield, Teff, Cereal crops, Productivity, Improvement, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:esspwp:60&r=eff |
| By: | Kidanemariam Berhe Hailu (National Graduate Institute for Policy Studies); Kaoru Tone (National Graduate Institute for Policy Studies) |
| Abstract: | In the ordinary macro-economic input-output tables, the industrial sector consists of several dozen industries and each industry in a certain sector is an aggregate of many companies in the sector. The sectoral statistics are the sum of statistics of companies in the respective sector. Usually, all sectors have the same set of inputs for producing outputs. For example, they have labour, capital and intermediate as input and amount of production as output. We can apply traditional DEA models for evaluation of efficiency regarding all sectors by means of these common input and output factors. However, there remain some insecure feelings in comparing all sectors as a scratch race. Some sectors are in fields with matured technologies, while others are in emerging fields. Some are labour intensive, while others are capital intensive. These situations lead us to compare sectors under a handicap race. In this paper, we propose a new DEA model based on the non-convex frontiers that all associated sectors may exhibit and handicaps are derived from. We apply this model to Ethiopian industry. |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:ngi:dpaper:14-07&r=eff |
| By: | Emir Malikov; Diego A. Restrepo-Tobón; Subal C. Kumbhakar |
| Abstract: | Credit risk is crucial to understanding banks’ production technology and should be explicitly accounted for when modeling the latter. The banking literature has largely accounted for risk by using ex-post realizations of banks’ uncertain outputs and the variables intended to capture risk. This is equivalent to estimating an ex-post realization of bank’s production technology which, however, may not reflect optimality conditions that banks seek to satisfy under uncertainty. The ex-post estimates of technology are likely to be biased and inconsistent, and one thus may call into question the reliability of the results regarding banks’ technological characteristics broadly reported in the literature. However, the extent to which these concerns are relevant for policy analysis is an empirical question. In this paper, we offer an alternative methodology to estimate banks’ production technology based on the ex-ante cost function. We model credit uncertainty explicitly by recognizing that bank managers minimize costs subject to given expected outputs and credit risk. We estimate unobservable expected outputs and associated credit risk levels from banks’ supply functions via nonparametric kernel methods. We apply this framework to estimate production technology of U.S. commercial banks during the period from 2001 to 2010 and contrast the new estimates with those based on the ex-post models widely employed in the literature. |
| Keywords: | Ex-Ante Cost Function; Production Uncertainty; Productivity; Returns to Scale; Risk |
| JEL: | C10 D81 G21 |
| Date: | 2013–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:col:000122:010938&r=eff |
| By: | Ragasa, Catherine; Dankyi, Awere; Acheampong, Patricia; Wiredu, Alexander Nimo; Chapoto, Antony; Asamoah, Marian; Tripp, Robert |
| Abstract: | This study aims to provide up-to-date analysis using rarely collected nationwide data on the patterns of adoption of improved technologies for rice in Ghana. |
| Keywords: | rice, Agricultural productivity, crop yield, improved technology, improved seed, fertilizer use, Herbicides, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:gsspwp:35&r=eff |
| By: | Barnett, Alina (Bank of England); Chiu, Adrian (Bank of England); Franklin, Jeremy (Bank of England); Sebastia-Barriel, Maria (Bank of England) |
| Abstract: | Labour productivity in the United Kingdom has been exceptionally weak since the 2007/08 financial crisis. This paper uses firm-level data from the Office for National Statistics Annual Business Survey and the Inter-Departmental Business Register to better understand the nature of this weakness. Overall, our findings are consistent with existing literature which finds that within-firm productivity growth tends to be procyclical and emphasises the importance of the reallocation of resources between firms and sectors for productivity growth. More specifically, we find that up until 2011 there was a doubling in the proportion of firms with shrinking output and flat employment. This suggests that firms were able to respond flexibly to weak demand conditions by retaining staff at the expense of measured productivity, suggestive of an opening up of spare capacity within firms. However, the strength of recent hiring behaviour since 2012 means that this is now likely to be less of a factor. The lack of labour shedding, together with a low firm exit rate, is also indicative of low levels of resource reallocation between firms and sectors. To assess the importance of this to aggregate productivity growth we apply the method used by Baily, Bartelsman and Haltiwanger. We find that reallocation between firms (in terms of both the movement of labour and firm entry and exit) contributed significantly to aggregate productivity growth before the crisis, but its contribution fell substantially after. In fact, around one third of the productivity slowdown after 2007 can be attributed to slower reallocation of resources. The extent to which reduced factor reallocation, and so the weakness in productivity growth, persists remains a key question for the economic outlook. |
| Keywords: | Productivity growth; long-run growth; resource reallocation; entry; exit; financial crisis |
| JEL: | E32 L11 O47 |
| Date: | 2014–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0495&r=eff |
| By: | Ragasa, Catherine; Dankyi, Awere; Acheampong, Patricia; Wiredu, Alexander Nimo; Chapoto, Antony; Asamoah, Marian; Tripp, Robert |
| Abstract: | The study aims to provide up-to-date and rarely collected nationwide data and analysis on the patterns of adoption of improved technologies for maize in Ghana. |
| Keywords: | maize, Agricultural productivity, crop yield, improved technology, improved seed, fertilizer use, Herbicides, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:gsspwp:36&r=eff |