nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2014‒12‒24
25 papers chosen by

  1. Data Envelopment Analysis: An Overview By Subhash C. Ray
  2. Cost Efficiency Analysis based on The DEA and StoNED Models: Case of Norwegian Electricity Distribution Companies By Cheng, Xiaomei; Bjørndal, Endre; Bjørndal, Mette
  3. Enterprise-level bargaining and labour productivity of Italian family firms: a quantile regression analysis By Damiani, Mirella; Pompei, Fabrizio; Ricci, Andrea
  4. The UK productivity puzzle is a TFP puzzle: current data and future predictions By Goodridge, PR; Haskel, J; Wallis, G
  5. Break-ups of municipal health centre federations: Expenditure and efficiency effects By Mika Kortelainen; Kalevi Luoma; Antti Moisio
  6. The Impact of Regional and Sectoral Productivity Changes on the U.S. Economy By Caliendo, Lorenzo; Parro, Fernando; Rossi-Hansberg, Esteban; Sarte, Pierre-Daniel
  7. Does regulation improve bank peroformance in South and East Asia? By Mamatzakis, Emmanuel; Hu, Wentao
  8. Ownership Structure and Firm Performance in the Egyptian Manufacturing Sector By Ahmed Fayez Abdelgouad; Christian Pfeifer; John P. Weche Gelübcke
  9. Managing the Family Firm: Evidence from CEOs at Work By Oriana Bandiera; Andrea Prat; Raffaella Sadun
  10. An Analysis of Inefficiency of Big Urban Water Utilities in LatinAmerica By José Luis Bonifaz; Reyk Itakura
  11. Agriculture and Child Under-Nutrition in India: A State Level Analysis By Swarna Sadasivam Vepa; Vinodhini Umashankar; R.V. Bhavani; Rohit Parasar
  12. The effect of corporate governance on the performance of US investment banks. By mamatzakis, em
  13. Does Business Regulation Matter for Banks in the European Union? By Mamatzakis, E
  14. Firms’ Innovation, Constrains and Productivity: the Case of Peru By Mario Tello
  15. FDI, structural change and productivity growth: global supply chains at work in Central and Eastern European countries By Jože Damijan; Črt Kostevc; Matija Rojec
  16. What Determines Efficiency? An Analysis of the Italian Water Sector By Monica Bonacina; Anna Cretì; Carlotta Mariotto; Federico Pontoni
  17. The impact of teacher characteristics on student performance: An analysis using hierarchical linear modelling By Paula Armstrong
  18. The Heavy Plough and the Agricultural Revolution in Medieval Europe By Thomas Barnebeck Andersen; Thomas Peter Sandholt Jensen; Christian Volmer Skovsgaard
  19. Explaining Differences in the Productivity of Capital Across Countries in the Context of 'New' Growth Theory By Kevin S. Nell; A.P. Thirlwall
  20. Empirical study on the correlation of corporate social responsibility with the banks efficiency and stability By T., Vasylieva; A., Lasukova
  21. Vertical Disintegration in the European Electricity Sector: Empirical Evidence on Lost Synergies By Klaus Gugler; Mario Liebensteiner; Stephan Schmitt
  22. STRUCTURE AND PERFORMANCE OF ETHIOPIA’S COFFEE EXPORT SECTOR By Minten, Bart; Tamru, Seneshaw; Kuma, Tadesse; Nyarko, Yaw
  23. Energy Use Patterns and Firm Performance: Evidence from Indian Industries By Santosh Kumar Sahu
  24. How Relevant Has Been the Learning-by-Doing for Brazilian Sugarcane Ethanol Production? By Héctor M. Núñez
  25. Corporate Governance and Bank Insolvency Risk : International Evidence By Anginer, D.; Demirguc-Kunt, Asli; Huizinga, H.P.; Ma, K.

  1. By: Subhash C. Ray (University of Connecticut)
    Abstract: Over the past decades Data Envelopment Analysis (DEA) has emerged as an important nonparametric method of evaluating performance of decision making units through benchmarking. Although developed primarily for measuring technical efficiency, DEA is now applied extensively for measuring scale efficiency, cost efficiency, and profit efficiency as well. This paper integrates the different DEA models commonly applied in empirical research with their underlying theoretical foundations in neoclassical production economics.
    Keywords: Linear Programming; Technical Efficiency; Returns to Scale; Distance Functions
    JEL: C6 D2
    Date: 2014–11
  2. By: Cheng, Xiaomei (Dept. of Business and Management Science, Norwegian School of Economics); Bjørndal, Endre (Dept. of Business and Management Science, Norwegian School of Economics); Bjørndal, Mette (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: Our paper applies data envelopment analysis (DEA) and stochastic non-parametric envelopment of data (StoNED) to measure cost efficiency of electricity distribution companies. The data cover 123 Norwegian electricity distribution companies during 2004-2010, and the performance of these companies is compared across the two models with and without environmental variables, i.e., variables that account for local conditions that affect the companies’ costs. The results indicate that the cost efficiency estimates with the StoNED approach are much higher than with the DEA method when we do not consider environmental variables. It shows that the choice of estimation methods is important with respect to the estimated impact of environmental variables on the performance. In addition, the inclusion of the environmental variables has considerable effect on the classification of companies with respect to local returns to scale.
    Keywords: Cost efficiency; DEA; Environmental variables; Regulation; StoNED
    JEL: Q00
    Date: 2014–06–26
  3. By: Damiani, Mirella; Pompei, Fabrizio; Ricci, Andrea
    Abstract: We investigate the role of Italian firms to evaluate their role on labour productivity performance. We find that family owned firms are less efficient than their no-family counterparts and also that family management negatively affects labour productivity. Furthermore, we estimate the role of firm level bargaining to verify whether family controlled firms, adopting these types of agreements, may partially close their efficiency gap with respect to their competitors. We find that enterprises under family governance obtain significant efficiency gains when they adopt firm level bargaining, greater than those obtained by their no-family counterparts.
    Keywords: Family firms, corporate governance, labour productivity
    JEL: G3 G32 J3 J33
    Date: 2014–12–05
  4. By: Goodridge, PR; Haskel, J; Wallis, G
    Date: 2014–12–08
  5. By: Mika Kortelainen; Kalevi Luoma; Antti Moisio
    Abstract: Empirical evidence on economies of scale in healthcare is mostly based on the cost effects of hospital mergers. In contrast to earlier studies, this paper approaches the economies of scale issue by analysing the break-ups of municipal health centre federations. We use the difference-in-difference models to evaluate the break-up impacts on costs, outputs and efficiency of health centres in Finland between 1990 and 2003. To address potential non-random or endogenous treatment assignment we also utilize propensity score difference-in-difference approach. For cost efficiency estimation we use the non-parametric order-alpha method that is more suitable for small samples than the traditional efficiency estimators. Our results show that healthcare costs have grown considerably faster for the seceded health centres than for the similar non-seceded ones, while outputs have increased more for the former than for the latter group. Interestingly, we find the impact of break-ups to be insignificant on the productive efficiency of health centres.
    Keywords: economies of scale; health care; municipalities; difference-in-difference;
    JEL: C21 D24 I11 R50
    Date: 2014–11
  6. By: Caliendo, Lorenzo; Parro, Fernando; Rossi-Hansberg, Esteban; Sarte, Pierre-Daniel
    Abstract: We study the impact of regional and sectoral productivity changes on the U.S. economy. To that end, we consider an environment that captures the effects of interregional and intersectoral trade in propagating disaggregated productivity changes at the level of a sector in a given U.S. state to the rest of the economy. The quantitative model we develop features pairwise interregional trade across all 50 U.S. states, 26 traded and non-traded industries, labor as a mobile factor, and structures and land as an immobile factor. We allow for sectoral linkages in the form of an intermediate input structure that matches the U.S. input-output matrix. Using data on trade flows by industry between states, as well as other regional and industry data, we obtain the aggregate, regional and sectoral elasticities of measured TFP, GDP, and employment to regional and sectoral productivity changes. We find that such elasticities can vary significantly depending on the sectors and regions affected and are importantly determined by the spatial structure of the US economy.
    Keywords: input-output; linkages; migration; propagation; trade
    JEL: E0 F1 F16 R12 R13
    Date: 2014–06
  7. By: Mamatzakis, Emmanuel; Hu, Wentao
    Abstract: In this paper, we utilize stochastic frontier analysis to estimate the impact of the regulations and institutions on bank efficiency through analyzing 389 savings and commercial banks in 11 Asian countries during the period 2000-2012. We find that activity restriction, capital requirement, official supervisory and private monitoring have a positive impact on bank performance. Furthermore, a wholesome institutional environment with powerful government, low corruption and strict law can enhance bank inefficiency. Our results suggest that banking regulations can improve bank performance with high quality of the institutional environment.
    Keywords: Bank efficiency, regulations, institutions.
    JEL: G0 G00 G1 G18
    Date: 2014–11–14
  8. By: Ahmed Fayez Abdelgouad (Leuphana University Lueneburg); Christian Pfeifer (Leuphana University Lueneburg); John P. Weche Gelübcke (Leuphana University Lueneburg; Forschungsinstitut zur Zukunft der Arbeit (IZA), Germany)
    Abstract: We use the World Bank enterprise survey for the Egyptian manufacturing sector to study the correlation between the ownership structure (private vs. public, Egyptian vs. Arab foreign vs. non-Arab foreign) and firm performance, which we measure as sales per worker, capacity utilization, and net profit rate. Our main findings indicate that (1) productivity differences between Egyptian private and public firms are not significant, but firms with public ownership have a lower capacity utilization and a lower net profit rate than private firms, (2) firms with private Arab and private non-Arab foreign ownership are significantly more productive and have a higher capacity utilization than purely Egyptian owned firms, and (3) differences between Arab and non-Arab foreign ownership are not significant for productivity and capacity utilization, but firms with non-Arab foreign ownership have a higher net profit rate than firms with Arab foreign or Egyptian owners.
    Date: 2014–09
  9. By: Oriana Bandiera; Andrea Prat; Raffaella Sadun
    Abstract: CEOs affect the performance of the firms they manage, and family CEOs seem to weaken it. Yet little is known about what top executives actually do, and whether it differs by firm ownership. We study CEOs in the Indian manufacturing sector, where family ownership is widespread and the productivity dispersion across firms is substantial. Time use analysis of 356 CEOs of listed firms yields three sets of findings. First, there is substantial variation in the number of hours CEOs devote to work activities, and longer working hours are associated with higher firm productivity, growth, profitability and CEO pay. Second, family CEOs record 8% fewer working hours relative to professional CEOs. The difference in hours worked is more pronounced in low competition environments and does not seem to be explained by measurement error. Third, difference in diffrences estimates with respect to the cost of effort, due to weather shocks and popular sport events, reveal that the observed difference between family and professional CEOs is consistent with heterogeneous preferences for work versus leisure. Evidence from six other countries reveals similar findings in economies at different stages of development.
    Date: 2013–12
  10. By: José Luis Bonifaz (Departamento de Economía, Universidad del Pacífico); Reyk Itakura
    Abstract: This study uses a stochastic frontier parametrical approach to analyze the inefficiency of firms in the water industry between 1999 and 2010. For this purpose, an unbalanced panel of data from 12 firms from all over Latin America was used. One of the main findings of the study is that companies from the private sector outperform those from the public sector over time. Another conclusion is that there are no economies of scale or density, considering the actual size of the average sector. Finally, inefficiency shows a positive correlation with the firms’ size and with the length of the network.
    Keywords: Inefficiency, Big, Urban, Water, Utilities, Latin, LatinAmerica, America, Private, Public, 1999, 2010, Panel, Data, 12, Firm, Economies of scale, Density, Size, Length, Network
    JEL: D24 H42 H54 H0 L10 L25 L32 L33 L95
    Date: 2014
  11. By: Swarna Sadasivam Vepa (Economist (LANSA), M. S. Swaminathan Research Foundation (Chennai) and Visiting faculty Madras School of Economics (Chennai)); Vinodhini Umashankar (Research Associates (LANSA), M. S. Swaminathan Research Foundation,); R.V. Bhavani (Project Manager, (LANSA), M. S. Swaminathan Research Foundation, Chennai,); Rohit Parasar (Research Associates (LANSA), M. S. Swaminathan Research Foundation,)
    Abstract: The literature review on agriculture-child nutrition linkage indicates that the evidence base is weak and inconclusive (Kadiyala et al., 2013). This paper explores the possible linkages between agricultural prosperity with rural child nutrition at the macro level, controlling for sanitation and safe drinking water, using panel data fixed effects and random effects models. The four alternate indicators of agricultural prosperity viz., agricultural growth, worker productivity, land productivity and food grain production per capita used alternatively enable us to conclude that negative influence of agricultural prosperity on child undernutrition exists, though the influence of various aspects of prosperity on underweight and stunting differ. Other aspects of agriculture considered, such as female agricultural wages help to reinforce the negative influence of agricultural prosperity on underweight in children and the land operational inequality dampens the impact of agricultural prosperity as it increases the incidence of stunting. Water and sanitation help reduce child undernutrition albeit differently on stunting and underweight. The same set of variables seems to influence stunting and underweight differently. Their trajectories seem to differ. The present study enables us to conclude that Indian agricultural growth through higher food grain production and through higher land productivity, when percolates through, labour productivity and higher wages, can reduce child undernutrition in rural India. However, public policy has to promote social provisioning of sanitation and health and make sure that agricultural growth is consistent. Public policy should ensure that growth translates into higher labour productivity and higher wages.
    Keywords: India; Agriculture, productivity, female wages child undernutrition
    JEL: Q19 I18
    Date: 2014–07
  12. By: mamatzakis, em
    Abstract: This paper focuses on the impact of the corporate governance, using a plethora of measures, on the performance of US investment banks over the 2000-2012 period. This time period offers a unique set of information, related to the credit crunch, that we model using a dynamic threshold analysis to reveal new insights into the relationship between corporate governance and bank performance. Results show that the board size asserts a negative effect on performance consistent with the ‘agency cost hypothesis’, particularly for banks with board size higher than ten members. Threshold analysis reveals that in the post-crisis period most of investment banks opt for boards with less than ten members, aiming to decrease agency conflicts that large boards suffer from. We also find a negative association between operational complexity and performance. Moreover, CEO power asserts a positive effect on performance consistent with the ‘stewardship hypothesis’. In addition, an increase in the bank ownership held by the board has a negative impact on performance for banks below a certain threshold. On the other hand, for banks with board ownership above the threshold value this effect turns positive, indicating an alignment between shareholders’ and managers’ incentives.
    Keywords: Investment Banking, Corporate governance, Performance, Board size, CEO power, Board Ownership.
    JEL: G18 G2 G21 G3 G38
    Date: 2014–11–14
  13. By: Mamatzakis, E
    Abstract: This paper provides a comprehensive analysis of the impact of business and financial specific regulations on banks in the EU-27 over the 2004-2010 periods. We employ for the first time in the banking literature a unique dataset of a wide range of regulation indices from the “Doing Business” project of the World Bank. Results for the credit regulation indices show that the strength of creditor rights is negatively related to bank performance as measured by cost efficiency, although this effect becomes less resilient during the recent crisis period (2008-2010). On the other hand, credit information sharing improves performance, a result that is further magnified during the crisis. Tax-compliance costs and entry regulation constrain bank performance. More stringent regulation of labour, in terms of minimum wage and dismissal costs, and insolvency regulation are positively associated with performance. Furthermore, regulation that protects investors from management expropriation, such as the extent of director liability, exerts a positive impact on bank performance and more so in the crisis years. Finally, we use interaction terms between the business regulation variables and institutional quality as measured by the rule of law and corruption. Results show that there are cases that institutional quality influences positively or negatively the individual effects of specific types of business regulation on bank performance.
    Keywords: regulation of business; bank performance; European Union.
    JEL: G21
    Date: 2014–11–14
  14. By: Mario Tello (Departamento de Economía - Pontificia Universidad Católica del Perú)
    Abstract: Based upon a standard Crepon, Duguet and Mairesse (1998), CDM, model and data at firms’ level, this paper analyzes the interrelationship between firms’ science, technology and innovation (STI) activities and their labor productivity in Peru for the year 2004. The effects of some constraints (i.e., investment innovation risks, market structure distortions and financial constraints) on firms’ decision and amount of investment on STI (or STI investment intensity) are also estimated. Subject to data limitations, the analysis suggests that firms’ size is an important factor in their decision to invest upon STI activities. In the same way, firms’ market share is a key factor in the determination of the level of investment on STI. On the other hand, investment risks and financial restriction seem to affect negatively to firms decision and amount of investment on STI respectively. However, their statistical effects vary among the six ISIC branches considered. The effects of market structure or anticompetitive practices were not clear in sign and statistical significance. Regarding the factors that foster innovation outputs or outcomes (such as new products, processes, commercial and organizational innovations) firms STI investment intensity, their degree of cooperation (collaboration) with other entities and the endowment of STI infrastructure are important factors that promote innovation outputs. Finally, although capital-labor ratio and human capital were determinants factors of firms’ labor productivity the effects of innovation outputs on labor productivity were not statistically significant or robust. JEL Classification-JEL: L6, O31
    Keywords: Science, technology and innovation, labor productivity and technological innovation, CDM model.
    Date: 2014
  15. By: Jože Damijan (University of Ljubljana, Faculty of Economica, Institute for Economic Research); Črt Kostevc (University of Ljubljana, Faculty of Economica, Institute for Economic Research); Matija Rojec (University of Ljubljana, Faculty of Social Sciences, Institute for Macroeconomic Analysis and Development)
    Abstract: This paper empirically accounts for the importance of the 'global supply chains' concept for export restructuring and productivity growth in Central and Eastern European Countries (CEECs) in the period 1995-2007. Using industry-level data and accounting for technology intensity, we show that FDI has significantly contributed to export restructuring in the CEECs. The effects of FDI are, however, heterogeneous across countries. While more advanced core CEECs succeeded in boosting exports in higher-end technology industries, non-core CEECs stuck with export specialization in lower-end technology industries. This suggests that question towards which industries FDI flows have been directed, is of key importance. Our results show that export restructuring and economic specialization brought about by FDI during the last two decades in the CEECs might matter a lot for their potential for long-run productivity growth. Industries of higher-end technology intensity have experienced substantially higher productivity growth and so countries have been more successful in attracting FDI to these industries.
    Keywords: trading agreements, developing countries, economic reforms
    JEL: F21 F23 L60 O14
  16. By: Monica Bonacina; Anna Cretì; Carlotta Mariotto; Federico Pontoni
    Abstract: The Italian water sector has encompassed major changes since mid?90s when law 96/94 has entered into force. Next to private participation, integration of services and growth in production scales, the reform was intended to revolutionize the traditional financial model almost fully based on public funds. Although citizens, politicians and experts on water services have been debating for a long time on the impact of the reform on the industry, as well as on the fairness of a tariff system inspired by the concept of full cost recovery, we are still on a state of uncertainty. The final purpose of this paper is to provide regulators with guidelines that could be used to revise water tariffs in a way that may be cost?efficient, sustainable and fair to the most. According to the analyses, which rely on firm?specific Xinefficiency scores, despite a satisfactory mean level of performance, in the period under investigation, efficiency improvements have been limited. Moreover, the results demonstrate that both the ownership structure and politics do have an impact on the efficiency of the firms: in particular, public shareholding and centreright local governments negatively affects firms’ performances. To this respect, we think that a more effective regulation would also have the side effect of loosening the ties between politicians and managers.
    Keywords: Water Policy, Water Distribution, Water Pricing, Efficiency.
    JEL: H44 L95
    Date: 2014
  17. By: Paula Armstrong (Department of Economics, University of Stellenbosch)
    Abstract: This paper makes use of hierarchical linear modelling to investigate which teacher characteristics impact significantly on student performance. Using data from the SACMEQIII study of 2007, an interesting and potentially important finding is that younger teachers are better able to improve the mean mathematics performance of their students. Furthermore, younger teachers themselves performance better on subject tests than do their older counterparts. Changes in teacher education in the late 1990s and early 2000s may explain the differences in the performance of younger teachers relative to their older counterparts. However, further investigation is required to fully understand these differences.
    Keywords: Education, teachers, hierarchical linear modelling
    JEL: I2 I21
    Date: 2014
  18. By: Thomas Barnebeck Andersen (University of Southern Denmark); Thomas Peter Sandholt Jensen (University of Southern Denmark); Christian Volmer Skovsgaard (University of Southern Denmark)
    Abstract: This research tests the long-standing hypothesis put forth by Lynn White, Jr. (1962) that the adoption of the heavy plough in Northern Europe was an important cause of economic development. White argued that it was impossible to take proper advantage of the fertile clay soils of Northern Europe prior to the invention and widespread adoption of the heavy plough. We implement the test in a difference-in-difference set-up by exploiting regional variation in the presence of fertile clay soils. Using a high quality dataset for Denmark, we find that historical counties with relatively more fertile clay soil experienced higher urbanization after the heavy plough had its breakthrough, which was around AD 1000. We obtain a similar result, when we extend the test to European regions
    Keywords: Heavy plough, medieval technology, agricultural productivity
    JEL: J1 N1 N93 O1 O33
    Date: 2014–12
  19. By: Kevin S. Nell; A.P. Thirlwall
    Abstract: The purpose of this paper is to explain differences in the productivity of capital across countries taking 84 rich and poor countries over the period 1980-2011, and to test the orthodox neoclassical assumption of diminishing returns to capital. The marginal product of capital is measured as the ratio of the long-run growth of GDP to a country’s investment ratio. Twenty potential determinants are considered using a general-to-specific model selection procedure. Education, government consumption, geography, export growth, openness, political rights and macroeconomic instability turn out to be the most important variables. The data also suggest constant returns to capital, so investment matters for long-run growth.
    Keywords: new growth theory; investment; productivity of capital
    JEL: O11 O33 O43 O47
    Date: 2014–11
  20. By: T., Vasylieva; A., Lasukova
    Abstract: The aim of this paper is to investigate the relationship between the corporate social responsibility concept and the most important characteristics of the banking – efficiency and stability in a sample of twelve Ukrainian banks, which are the biggest one in Ukraine according the National bank of Ukraine (NBU) classification. Our research covers the period from 2006 to 2012. Drawing on the literature review, we pointed out two main hypothesis related to the impact on the corporate social responsibility concept (CSR) of the following independent variables: 1 – efficiency (as a short term period characteristics of banking), 2 – stability (as a long term characteristics of banking).
    Keywords: bank, corporate social responsibility, efficiency, stability, sustainable development
    JEL: C33 C58 G21 M14
    Date: 2013
  21. By: Klaus Gugler (Department of Economics, Vienna University of Economics and Business); Mario Liebensteiner (Research Institute for Regulatory Economics, Vienna University of Economics and Business); Stephan Schmitt (WIK Consult and Research Institute for Regulatory Economics, Vienna University of Economics and Business)
    Abstract: The EU has been promoting unbundling of the transmission grid from other stages of the electricity supply chain with the aim of fostering competition in the upstream stage of electricity generation. At presence, ownership unbundling is the predominant form of unbundling in Europe. However, the benefits of increased competition from ownership unbundling of the transmission grid may come at the cost of lost vertical synergies between the formerly integrated stages of electricity supply. The policy debate generally neglects such potential costs of unbundling, yet concentrates on its benefits. Therefore European cross-country evidence may shed some light on this issue. This study helps fill this void by empirically estimating the magnitude of economies of vertical integration (EVI) between electricity generation and transmission based on a quadratic cost function. For this purpose we employ novel firm-level panel data of major European electricity utilities. Our results confirm the presence of substantial EVI, which put the policy measure of transmission ownership unbundling into question.
    Keywords: Cost function, Economies of Scope, Ownership Unbundling, Vertical Integration
    JEL: L22 L25 L51 Q48
    Date: 2014–11
  22. By: Minten, Bart; Tamru, Seneshaw; Kuma, Tadesse; Nyarko, Yaw
    Abstract: We study the structure and performance of the coffee export sector in Ethiopia, Africa’s most important coffee producer, over the period 2003 to 2013. We find an evolving policy environment leading to structural changes in the export sector, including an elimination of vertical integration for most exporters. Ethiopia’s coffee export earnings improved dramatically over this period, i.e. a four-fold real increase. This has mostly been due to increases in international market prices. Quality improved only slightly over time, but the quantity exported increased by 50 percent, seemingly explained by increased domestic supplies as well as reduced local consumption. To further improve export performance, investments to increase the quantities produced and to improve quality are needed, including an increase in washing, certification, and traceability, as these characteristics are shown to be associated with significant quality premiums in international markets.
    Keywords: coffee, Ethiopia, exports, Agribusiness, Agricultural and Food Policy, Crop Production/Industries, International Relations/Trade, Productivity Analysis,
    Date: 2014–10
  23. By: Santosh Kumar Sahu (Madras School of Economics)
    Abstract: This paper is an attempt to understand the relationship between firm performances based on energy use patterns of Indian manufacturing industries. Determinates of firm performances are estimated for the full sample and for the sample of firms using similar energy sources. Econometric analysis of the data collected from the CMIE PROWESS at firm level from 2005-2013 reveals that the determinants of profitability vary across groups. Energy intensity is positively related to profitability for three models except for the firms using natural gas as primary source of energy. R and D intensity is positively related to profitability for the full sample and for the firms using petroleum. For the firms using coal as primary source of energy, less R and D intensive firms are found to be profitable. For all the cases, firm size is found to be nonlinearly related to profitability. In the policy front, shifting primary energy source from coal and petroleum to natural gas; firms can become energy efficient and profitable.
    Keywords: Energy Use, Firm Performance, Indian Manufacturing, Energy Intensity, Profitability
    JEL: Q4 B23
    Date: 2014–09
  24. By: Héctor M. Núñez (Division of Economics, CIDE)
    Abstract: This paper examines the role of several factors in reducing the production costs of Brazilian sugarcane ethanol, including learning-by-doing (LBD), economies of scale, rising factor prices, market competitiveness, and exogenous technological changes. Using the aggregate industry-level data over the period 1975- 2010, we find that the reduction in production costs of sugarcane ethanol was primarily driven by autonomous technological changes and unrelated to LBD. The increase in energy prices raised production costs of sugarcane ethanol, while the effects of other input prices on reducing production costs of sugarcane ethanol are found to be insignificant. By increasing the costs of procuring key inputs for ethanol production, market competitiveness had a negative effect on reducing production costs of sugarcane ethanol. The role of economies of scale in affecting sugarcane ethanol production costs is inconclusive depending on model specifications.
    Keywords: Sugarcane ethanol, Production cost reductions, Learning-by-doing; Technological changes
    JEL: O33 Q20 Q42
    Date: 2013–06
  25. By: Anginer, D.; Demirguc-Kunt, Asli; Huizinga, H.P. (Tilburg University, Center For Economic Research); Ma, K. (Tilburg University, Center For Economic Research)
    Abstract: This paper finds that shareholder-friendly corporate governance is positively associated with bank insolvency risk, as proxied by the Z-score and the Merton’s distance to default measure, for an international sample of banks over the 2004-2008 period. Banks are special in that ‘good’ corporate governance increases bank insolvency risk relatively more for banks that are large and located in countries with sound public finances, as banks aim to exploit the financial safety net. ‘Good’ corporate governance is specifically associated with higher asset volatility, more non-performing loans, and a lower tangible capital ratio. Furthermore, ‘good’ corporate governance is associated with more bank risk taking at times of rapid economic expansion. Consistent with increased risk-taking, ‘good’ corporate governance is associated with a higher valuation of the implicit insurance provided by the financial safety net, especially in the case of large banks. These results underline the importance of the financial safety net and too-big-to-fail policies in encouraging excessive risk-taking by banks
    Keywords: Corporate governance; Bank insolvency; Capitalization; Non-performing loans
    JEL: G21 M21
    Date: 2014

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