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on Efficiency and Productivity |
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Issue of 2014‒07‒21
nine papers chosen by |
| By: | John Goddard (Bangor University, UK); Phil Molyneux (Bangor University, UK); Jonathan Williams (Bangor University, UK) |
| Abstract: | This paper contributes to the bank efficiency literature through an application of recently developed random parameters models for stochastic frontier analysis. We estimate standard fixed and random effects models, and alternative specifications of random parameters models that accommodate cross-sectional parameter heterogeneity. A Monte Carlo simulations exercise is used to investigate the implications for the accuracy of the estimated inefficiency scores of estimation using either an under-parameterized, over-parameterized or correctly specified cost function. On average, the estimated mean efficiencies obtained from random parameters models tend to be higher than those obtained using fixed or random effects, because random parameters models do not confound parameter heterogeneity with inefficiency. Using a random parameters model, we analyse the evolution of the average rank cost efficiency for Latin American banks between 1985 and 2010. Cost efficiency deteriorated during the 1990s, particularly for state-owned banks, before improving during the 2000s but prior to the subprime crisis. The effects of the latter varied between countries and bank ownership types |
| Keywords: | Efficiency; stochastic frontier; random parameters models; bank ownership; Latin America |
| JEL: | C23 D24 G21 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:bng:wpaper:13011&r=eff |
| By: | Benfica, Rui; Boughton, Duncan; Mouzinho, Bordalo; Uaiene, Rafael |
| Abstract: | This paper assesses the relationship between agricultural productivity and market participation and performance following an increase in market prices in Mozambique. We use panel data before and after the change in price regime to identify the relative importance of market access/participation versus household and farm-level factors in explaining productivity differences. Conversely, we look at the relative importance of productivity investments and outcomes versus marketing investments in explaining household market performance. We find that between 2008, before the price increases, and 2011, there were increases in market participation rates and in the intensity of participation. Modest increases are also found in terms of productivity for all crop groups. |
| Keywords: | Agricultural and Food Policy, Food Security and Poverty, International Development, Marketing, Production Economics, Productivity Analysis, Research Methods/ Statistical Methods, |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:midcwp:176722&r=eff |
| By: | KATO Atsuyuki |
| Abstract: | This paper examines the relationship between productivity, markups, and development of foreign markets using a rich firm-level dataset of the Japanese manufacturing industry during the period 2000-2010. Using estimates of firm-specific productivity and markups, we investigate if the development of foreign markets through exports has a premium for their market performance. Our study confirmed that exports have significant productivity and markup premiums. In addition, export premiums vary across the destination markets. Exports to Asia show a significant productivity premium while other markets do not. For markups, exports to Asia and North America have a significant premium. These findings imply that both productivity and markups should be considered in assessing the development of foreign markets. |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:14037&r=eff |
| By: | Timothy King (Leeds University); Jonathan Williams (Bangor University, UK) |
| Abstract: | We investigate whether handsomely rewarding bank executives’ realizes superior efficiency by determining if executive remuneration contracts produce incentives that offset potential agency problems and lead to improvements in bank efficiency. We calculate executive Delta and Vega to proxy executives’ risk-taking following changes in their compensation contracts and estimate their relationship with alternative profit efficiency. Our study uses novel instruments to account for the potentially endogenous relationship between efficiency and Delta and Vega whilst controlling for the structure of executive compensation, board structure, and bank-level characteristics. Our main results demonstrate that shareholders use executive Vega to incentivise executives into taking risks that improve bank efficiency, and also that executive perquisites can be used to attract and retain executives which ex post deliver efficiency gains. |
| Keywords: | Banks, corporate governance, executive remuneration, efficiency, stochastic frontier. |
| JEL: | C2 G21 G3 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:bng:wpaper:13009&r=eff |
| By: | Jin Wei (Zhejiang University); ZhongXiang Zhang (School of Economics, Fudan University) |
| Abstract: | International diffusion of energy-saving technologies has received considerable attention in recent energy and environmental economics studies. As a helpful complement to the existing large-scale "black box" modelling works for energy/climate policy analysis, this paper contributes to a transparent analytical model for an economically intuitive exposition of the fundamental mechanism of international technology diffusion for energy productivity growth. We first develop a Solow-type exogenous model where technical change is specified as improvements in energy use efficiency (efficiency-improving vertical innovation). This model is then extended to a Romer-type endogenous model where technical change is described as an expansion of energy technology variety induced by R&D (variety-expanding horizontal innovation). We show that there is a cross-country convergence in the growth rate of energy productivity in a balanced growth path equilibrium, but the absolute levels of energy productivity diverge due to cross-country differences in indigenous innovation efficiency and knowledge absorptive capacities. An economy with a strong capacity of absorbing foreign knowledge diffusion and undertaking indigenous innovation tends to have a higher level of energy productivity. |
| Keywords: | technological innovation, energy technology diffusion, Solow growth model, endogenous growth model |
| JEL: | Q55 Q58 Q43 Q48 O13 O31 O33 O44 F18 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:een:ccepwp:1405&r=eff |
| By: | Jože P. Damijan (Faculty of Economics, University of Ljubljana.) |
| Abstract: | The paper studies the extent of corporate leverage and range of excessive debt of Slovenian firms during the recent financial crisis. Half of all firms (of those with some non-zero debt and at least one employee) are found to face an unsustainable debt-to-EBITDA leverage ratio beyond 4, accounting for almost 80 per cent of total outstanding debt. Moreover, a good quarter of all firms experience debt-to-EBITDA ratios exceeding 10 and hold almost half of total aggregate net debt. We then examine how this financial distress affects firm performance in terms of productivity, employment, exports, investment and survival. We find that, while less important during the good times (prerecession period), lack of firm financial soundness during the period of financial distress becomes a critical factor constraining firm performance. The extent of financial leverage and ability to service the outstanding debt are shown to inhibit firms’ productivity growth as well as the dynamics of exports, employment and investment. Micro and small firms are found to suffer relatively more than larger firms from high leverage in terms of export and employment performance during the recession period. |
| Keywords: | financial crisis, corporate debt restructuring, insolvency, bank restructuring |
| JEL: | G33 G34 K22 K30 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:ebd:wpaper:168&r=eff |
| By: | Gibson, Matthew; Shrader, Jeffrey |
| Abstract: | While economists have long been interested in effects of health and human capital on productivity, less attention has been paid to the influence of time use. We investigate the productivity effects of the single largest use of time--sleep. Because sleep influences performance on memory and focus intensive tasks, it plausibly affects economic outcomes. We identify the effect of sleep on wages by exploiting the relationship between sunset time and sleep duration. Using a large, nationally representative set of time use diaries from the United States, we provide the first causal estimates of the impact of sleep on wages: a one-hour increase in long-run average sleep increases wages by 16%, equivalent to more than one year of schooling. We also document the nonlinearity of the sleep-wage relationship. Our results highlight the economic importance of sleep and pose potentially fruitful questions about the effects of time use on labor market outcomes. (JEL No. J22, J24, J31) |
| Keywords: | Social and Behavioral Sciences |
| Date: | 2014–07–14 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:ucsdec:qt8zp518hc&r=eff |
| By: | Gianmarco I. P. Ottaviano (London School of Economics and University of Bologna, CEP and LdA); Filipe Lage de Sousa (World Bank and Universidade Federal Fluminense) |
| Abstract: | Especially in developing countries credit constraints are often perceived as one of the most important market frictions constraining firm innovation and growth. Huge amounts of public money are being devoted to the removal of such constraints but their effectiveness is still subject to an intense policy debate. This paper contributes to this debate by analysing the effects of the Brazilian Development Bank (BNDES) loans. It finds that, before receiving BNDES support, granted firms are indeed more credit constrained than comparable non-granted firms. It also finds that BNDES support allows granted firms to achieve the same level of performance as similar non-granted firms that are not credit constrained. However, it does not allow granted firms to outperform similar non-granted ones. |
| Keywords: | heterogeneous firms, productivity, public policy analysis, credit constraints |
| JEL: | O38 H00 |
| Date: | 2014–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:369&r=eff |
| By: | David I. Levine; Dean Yang |
| Abstract: | We estimate the impact of weather variation on agricultural output in Indonesia by examining the impact of local rainfall shocks on rice output at the district level. Our analysis makes use of local meteorological data on rainfall in combination with government administrative data on district-level rice output in the 1990s. We find that deviations from mean local rainfall are positively associated with district-level rice output. 10% higher rainfall leads metric tons of rice output to be 0.4% higher on average. The impact of rainfall on rice output occurs contemporaneously (in the same calendar year), rather than with a lag. These results suggest that researchers should be justified in interpreting higher rainfall as a positive contemporaneous shock to local economic conditions in Indonesia. |
| JEL: | O13 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20302&r=eff |