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on Efficiency and Productivity |
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Issue of 2017‒01‒08
23 papers chosen by |
| By: | Mitsuhiko Kataoka |
| Abstract: | Indonesia is beset by uneven regional resource endowment and interregional income inequalities. Kataoka (2011) concluded that these are largely determined by the labor productivity differential, using the Duro and Esteban (1998) inequality decomposition approach. We empirically explored the extent to which interprovincial differentials in efficiency explain Indonesia?s pre- and post-crisis income inequalities, by employing Cheng and Li?s (2006) approach. They proposed the interpretive additive inequality decomposition of Theil?s second measure by causal factors and showed that interregional income inequality consists strictly of Theil?s second measure of productivity as well as of labor participation rates and their interaction terms. Their method improves Duro and Esteban?s (1998) inequality decomposition in which terms can take positive or negative values, although a strict Theil index maintains a non-negative value for its property. Moreover, negative decomposition values are hardly interpretive, contributing to overall inequality. To incorporate efficiency factors, we estimated the production frontier and efficiency score of each observation point, using the data envelopment analysis of Coelli et al. (1998). We adopted the piecewise-linear frontier exhibiting variable returns to scale. Efficiency is gauged by standard Farrell output-oriented measures. Our DEA model employs multiple inputs (capital and labor) and a single output to estimate two provincial output values: those without technical inefficiency, assuming variable returns to scale (denoted as ye) and those without scale inefficiency, assuming constant returns to scale (denoted as ys). Using other variables of labor (denoted as l) and actual output (denoted as ya), labor productivity (denoted as ya/L) can be expressed with three multiplicative components: pure labor productivity (denoted as ye/L), pure technical efficiency (denoted as ya/ys), and scale efficiency (denoted as ys/ye). Applying Cheng and Li?s (2006) inequality decomposition, interprovincial productivity differentials show the sum of the corresponding Theil second measure components and their interactions. We used annual observations of 26 contiguous provincial output and input factors from 1993 to 2010, sourced from Kataoka?s (2013) dataset. Taking into account of the effects of natural resource endowment on the corresponding provinces' economies, two different output values were employed: aggregate GDP and GDP without the oil and gas sector. We found that the impact of technical inefficiency on interprovincial productivity differentials has a declining trend for the observation periods. Cheng, Y.-S. and S.-K. Li., 2006. ?Income inequality and efficiency: A decomposition approach and applications to China?, Economics Letters 91 (1): 8?14. Coelli, Tim, Rao, D.S. Prasada, Battese, George E., 1998. An Introduction to Efficiency and Productivity Analysis. Kluwer Academic Publishers, Boston. Duro, Juan Antonio, Esteban, Joan, 1998. Factor decomposition of cross-country income inequality, 1960?1990. Economics Letters 60: 269?275. Kataoka, M., 2013. Capital stock estimates by province and interprovincial distribution in Indonesia, Asian Economic Journal, 27(4): 411-430. |
| Keywords: | Data Envelopment Analysis; Income inequality; Decomposition |
| JEL: | R11 R12 R58 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa16p412&r=eff |
| By: | Fernanda Ricotta |
| Abstract: | The performance of a firm is influenced by decisions made by the firm itself as well as factors external to it. Firm competencies are important but also competencies that pertain to territories. External factors encompass different aspects of the environmental context in which firms operate, such as physical infrastructures, innovative capacity and efficiency of the public administration. The attention in this paper is on the effect of regional quality of government (QoG) on the Total Factor Productivity (TFP) of firms. The analysis is based on comparable cross-country data of manufacturing firms operating in the seven European countries (Austria, France, Germany, Hungary, Italy, Spain and the United Kingdom) included in the ?European Firms in a Global Economy: internal policies for external competitiveness? (EFIGE) project. The measure of the ?quality of government? is the European quality of government index (EQI), calculated at regional level over twenty-seven EU members. Scholars have demonstrated that the institutional environment affects macro variables such as growth, income level, productivity, innovation activity, investment and trade at the country (Aron 2000; Acemoglu, Johnson and Robinson, 2001; Hall and Jones, 1999; Barbarosa and Faria 2011; Levchenko 2007) as well as at the regional level (Tabellini 2010; Rodríguez-Pose and Di Cataldo 2014; Ketterer and Rodríguez-Pose 2014). The quality of institutions also influences micro variables such as firm performance (Dollar, Hallward-Driemeier, and Mengistae, 2005; Lasagni, Nifo and Vecchione, 2015; Aiello, Pupo and Ricotta, 2014; Manzocchi, Quintieri and Santoni, 2014). Recent studies indicate that there might be a significant difference in the macro- and micro-impacts of institutional quality: better institutional quality that may have beneficial macro-implications, may not necessarily have positive implications for firm performance (Bhaumik and Dimova 2014). Thus, the proper level of analysis to test whether the regional institutional environment affects productivity is to focus on firms (Beugelsdijk 2007). To disentangle internal from external productivity drivers, the multilevel approach is employed. In the econometric specification, the 2008-value of TFP depends on key-drivers of firm performance (size, family-management, group membership, innovations and human capital), on the variable of interest, the indicator of the quality of government, and on control variables at the regional level that, according to the theoretical and empirical literature, may affect firms? economic performance. Results refer to 2008 and show, as expected, the importance of firm-specific determinants of TFP. Results confirm that to be located in a region with high level of R&D and good infrastructure is correlated positively to the firm?s TFP. As far as the specific scope of this paper is concerned, the quality of regional government has a positive impact on firm TFP. This is in line with previous research which underlines the importance of the quality of institutions at the regional level while it contradicts the hypothesis that within country institutional differences do not matter for economic performance (Gennaioli et al, 2013). As far as the EQI components are concerned, corruption and the quality of services appear to be positively correlated to TFP, while the evidence is inconclusive for the impartiality indicator. |
| Keywords: | Institutions; firm performance; European regions; multilevel model |
| JEL: | O43 D24 C30 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa16p357&r=eff |
| By: | Löschel, Andreas; Lutz, Benjamin Johannes; Managi, Shunsuke |
| Abstract: | We investigate the effect of the European Union Emissions Trading System (EU ETS) on the economic performance of manufacturing firms in Germany. Our difference-in-differences framework relies on several parametric conditioning strategies and nearest neighbor matching. As a measure of economic performance, we use the firm specific distance to the stochastic production frontier recovered from official German production census data. None of our identification strategies provide evidence for a statistically significant negative effect of emissions trading on economic performance. On the contrary, the results of the nearest neighbor matching suggest that the EU ETS rather had a positive impact on the economic performance of the regulated firms, especially during the first compliance period. A subsample analysis confirms that EU ETS increased the efficiency of treated firms in at least some two-digit industries. |
| Keywords: | Control of Externalities,Emissions Trading,Economic Performance,Manufacturing,Difference-in-Differences,Nearest Neighbor Matching,Stochastic Production Frontier |
| JEL: | Q52 D22 Q38 Q48 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:16089&r=eff |
| By: | Lajos Barath (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Heinrich Hockmann (Department Agricultural Markets - Leibniz Institute of Agricultural Development in Transition Economies (IAMO)) |
| Abstract: | Existing studies of agricultural production largely neglect technology heterogeneity. However, the assumption of homogeneous production may result in inadequate policy implications. There is a growing literature on this issue. In this paper we contribute to this literature by modelling the effect of heterogeneous technologies and its impact on technological parameters and technical efficiency using a reformulated Random parameter Model. Our approach is based on the model developed by Alvarez et al. (2004). However, the original version of this model faces one crucial econometric problem: the assumption of independence of technical inefficiency and input variables does not, hence the estimated results are not necessarily consistent. Therefore we reformulate the model to allow for a more consistent estimation. Additionally, we examine the importance of the fulfilment of theoretical consistency: monotonicity and quasi-concavity. In order to fulfil these criteria we apply constrained maximum likelihood estimation, more specifically we build linear and non-linear constraints into the model and force it to yield theoretically consistent results, not only in the mean but also in different approximation points. For the empirical analysis we use farm level data from the Hungarian FADN Database. The results showed that considering technological differences is important. According to model selection criteria the modified Alvarez model with constraints was the preferred specification. Additionally, the results imply that the consideration of the effect of heterogeneous technologies on production potential and efficiency crucial in order to get adequate policy implication. |
| Keywords: | technical efficiency, technological heterogeneity, Random Parameter Model, theoretical consistency, monotonicity, quasi-concavity, Hungarian agriculture |
| JEL: | C5 D24 Q12 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:1636&r=eff |
| By: | Enrica Di Stefano (Bank of Italy); Daniela Marconi (Bank of Italy) |
| Abstract: | Market frictions prevent the efficient allocation of factors of production, slow down structural transformation and lead to costs in terms of lower output and aggregate total factor productivity (TFP). We use a theoretical framework developed by Aoki (2012) featuring sector-specific frictions on capital and labor à la Chari, Kehoe and McGrattan (2007), and compute capital and labor misallocations in China and India using data for 26 sectors over the period 1980-2010. Our findings show that large factor misallocations exist in the two countries. We estimate the potential gains in terms of aggregate TFP stemming from an efficient allocation of factors to range from 25% to 35% in China and from 35% to 40% in India. Finally, we discuss the implications for structural transformation and the relationship between the observed allocation inefficiencies and the evolution of the business environment in the two countries. |
| Keywords: | structural transformation, frictions, resource allocation, productivity, China, India |
| JEL: | E23 O11 O41 O47 O53 O57 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1093_16&r=eff |
| By: | Mussa, Richard |
| Abstract: | The paper assesses the effects of maize yields just prior to birth (in utero), in the first and the second years of life on adult life productivity and efficiency of maize farmers born between 1984 and 1995 in rural Malawi. To ensure that early life maize yields are not confounded by omitted local chacteristics, they are transformed into relative maize yields by using a cumulative gamma distribution. I find that maize yield just prior to birth significantly increases maize output in a farmer's adult life. However, relative maize yields in the first and second years of life have no long-term effects on maize production. Furthermore, there is no long-term impact of early life maize yields on the technical efficiency of maize production. These findings survive a number of robustness checks including alternative definitions of early life maize yields, controlling for migration and allowing for serial correlation. Furthermore, the results are not driven by sample selection originating from survival induced by maize yields in early life. Thus, low maize productivity in early-life begets low maize productivity in adult life. The paper finds that the impact of inputs under the farm input subsidy programme (FISP) on maize productivity is almost of the same order of magnitude as the long-term impact of maize yield in utero. |
| Keywords: | Productivity; In utero; Malawi |
| JEL: | Q12 |
| Date: | 2017–01–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:75975&r=eff |
| By: | Fazlıoğlu, Burcu; Dalgıç, Başak; Yereli, Ahmet Burçin |
| Abstract: | This paper explores the effects of firms’ innovation activities on their productivity changes systematically for Turkish manufacturing firms differentiating between different typologies of innovation. To do so, we utilize a recent and comprehensive firm level dataset over the period 2003-2014, mainly constructed on the four consecutive waves of the “Community Innovation Surveys”. We employ endogenous switching methodology controlling for endogeneity and selection bias issues as well as analyzing counterfactual scenarios. The main finding of the study points to firm heterogeneity in terms of both propensity to innovate and their benefiting from innovation activities. Our results indicate that all types of innovation activity have positive effects on the productivity of firms with respect to non-innovating firms. Further, we find robust evidence for the differential impact of innovation on firm productivity across different innovation types. |
| Keywords: | Internal and External R&D, Product and Process Innovation, Organizational and Marketing Innovation, Firm Productivity |
| JEL: | D22 L25 O30 |
| Date: | 2016–12–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:75773&r=eff |
| By: | Guillermo Jopen Sánchez (Pontificia Universidad Católica del Perú) |
| Abstract: | This research article applies an analysis of efficiency in the process of educational outcomes (or "educational efficiency") on Peruvian elementary schools. It evaluates whether there are significant differences in efficiency analysis if educational outcome is considered unidimensional (only considered the educational achievement) or multidimensional (also includes access and retention in the education system). Furthermore, this document investigates the causes of these differences, and their relationship with characteristics of the demand for educational services. For that purpose, parametric and nonparametric methods are used to identify educational efficiency levels, and the Tobit methodology to estimate the effects of non-discretionary factors. The research points toward the conclusion that Peruvian elementary schools have heterogeneous levels of efficiency. Main aspects that explain this heterogeneity are school experience in generating educational outcomes, the prevalence of students with preschool education, and socioeconomic status of their households. |
| Keywords: | Analysis of Education, Education and Inequality, Parametric and Nonparametric Methods, Government Policy |
| JEL: | I21 I24 C14 I28 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:apc:wpaper:2016-077&r=eff |
| By: | Tasso Adamopoulos; Loren Brandt; Jessica Leight; Diego Restuccia |
| Abstract: | We use household-level panel data from China and a quantitative framework to document the extent and consequences of factor misallocation in agriculture. We find that there are substantial frictions in both the land and capital markets linked to land institutions in rural China that disproportionately constrain the more productive farmers. These frictions reduce aggregate agricultural productivity in China by affecting two key margins: (1) the allocation of resources across farmers (misallocation) and (2) the allocation of workers across sectors, in particular the type of farmers who operate in agriculture (selection). We show that selection can substantially amplify the static misallocation effect of distortionary policies by affecting occupational choices that worsen the distribution of productive units in agriculture. |
| Keywords: | agriculture, misallocation, selection, productivity, China. |
| JEL: | O11 O14 O4 |
| Date: | 2017–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-574&r=eff |
| By: | El-Baz, Osama |
| Abstract: | The Egyptian economy has witnessed a plunge in its main macroeconomic indicators after the Arab spring as reflected in the estimated Economic Stability Trend Index (ESTI). The main purpose of the paper was to estimate Egypt's potential output and identify the factors that might be responsible for the divergence of actual and potential output from each other. The production function approach was used to derive estimates of both potential output and output gap over the period (1990-2014). The results of the analysis revealed that capital stock was the dominant factor contributing to potential GDP growth in Egypt, while the shares of both labor and total factor productivity in potential GDP growth rate have been fluctuating over time. Intellectual property protection, efficiency of the legal framework in settling disputes, strength of investor protection, and other factors exhibited a strong positive relationship with output gap in Egypt over the period (2010-2014). |
| Keywords: | Potential Output, Output Gap, Production Function, HP Filter |
| JEL: | E1 E17 E2 E22 E6 |
| Date: | 2016–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:75778&r=eff |
| By: | Piva, Mariacristina (Università Cattolica del Sacro Cuore); Tani, Massimiliano (University of New South Wales); Vivarelli, Marco (Università Cattolica del Sacro Cuore) |
| Abstract: | The aim of this paper is to investigate the productivity impact of business visits, relative to traditional drivers of productivity enhancement, namely capital formation and R&D. To carry out the analysis, we combine unique and novel data on business visits sourced from the U.S. National Business Travel Association with OECD data on R&D and capital formation. The resulting unbalanced panel covers on average 16 sectors per year in 10 countries during the period 1998-2011 (2,262 observations). Our results suggest that mobility through business visits is an effective mechanism to improve productivity. The estimated effect is about half as large as investing in R&D, supporting viewing business visits as a form of long-term investment rather than pure consumption expenditure. In a nutshell, our outcomes support the need to recognize the private and social value of business mobility. |
| Keywords: | business visits, labour mobility, knowledge, R&D, productivity |
| JEL: | O33 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10421&r=eff |
| By: | Milene Simone Tessarin; Paulo César Morceiro, André Luis Squarize Chagas |
| Abstract: | The innovation in industry occurs due to direct investment of the firm, motivated by economic interests, as profit, market share, economies of scope, etc. However, same these decisions can be influenced by indirect shocks occurring in closest industry, as an innovation in automobile industry motivating changes in its chain production. The aim of this paper is to evaluate the peer effects on the innovation indicators in Brazilian manufacturing industry. For this, we proposed a new way to measure the proximity of the industries. We consider the typical goods produced by an industry in the main subsector and in other sub-sectors. These sub-sectors are considered neighbors because they use the same technological and production bases. The sectorial proximity was building through a detailed “sectorial diversification matrix” of firms producing goods in one or more subsector (of a total 103 subsectors of the Brazilian manufacturing) in 2013. Brazilian Institute of Geography and Statistics (IBGE) provided the data from a specific request, special to this work. The data composed a W-matrix relating one by one sector. As an innovation proxy, we considered the number of engineers employed divided by the total number of 2 employees in each subsector. This indicator is a proxy recognized of the innovative efforts of companies, because innovation and technological intensity are related to technical staff' skills. To test the peer effects hypothesis we considered the Moran's I test, and we used the LM and the LM robust tests to choose a best econometric model that confirms the sectorial spatial dependence. The results suggest the existence of strong sectorial peer effects among subsectors with the same technological level (low and medium-low, and high and medium-high). Moreover, there is a weak neighborhood effect between subsectors of different technological levels. Therefore, the technological level of a sector is a good indicator of their relations of sectorial neighborhood. These results can be useful for policymakers assign public policies focused on subsectors generating greater spillovers effects on the production and innovation structure. We think this work is a contribution to the use of spatial econometric analysis beyond the geographical neighborhood. It also sheds light on a fertile research agenda, which is currently absent in the industrial organization literature. |
| Keywords: | Sectoral neighborhood; Innovation; Spatial econometrics |
| JEL: | C23 O3 L14 |
| Date: | 2016–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:spa:wpaper:2016wpecon37&r=eff |
| By: | Paulino Montes-Solla; Andres Faina; Jesus Lopez-Rodriguez |
| Abstract: | This paper analyses the different factors that explain the pattern of economic growth in Spain along the last two decades, where has stood out the rapid growth of per capita income, capital accumulation and creation of employment. However, the most important structural phenomenon of the strong growth of the Spanish economy, especially in the decade from 1998-2007, was the limited growth in terms of output per worker and total factor productivity (TFP), which in combination with wage increases has led to a loss of competitiveness. An extended Solow growth model was estimated with panel data for the Spanish regions to measure the contribution of different factors of production (with special interest in the stock of private and human capital, as well as the gap of transport infrastructure capital) to the productivity of labour and the temporal evolution of TFP over the period 1989-2010. The results of our analysis provide strong evidence of stagnation in productivity throughout most of the period under study. The large investments and the strong growth in capital stocks were practically absorbed by an intense process of job creation. As a consequence, the capital/labour ratio and labour productivity levels remained almost constant whereas total factor productivity (TFP) decreased over the period of analysis. Therefore unlike other European countries, Spain did not experience a phenomenon of capital deepening with an increase in productivity. The intense GDP pc growth in Spain was of a rather "extensive" type, mainly based on a capital widening process. |
| Keywords: | Regional Development; Infrastructures; Capital Widening; Productivity stagnation; TFP |
| JEL: | R10 R11 R12 R13 R14 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa16p983&r=eff |
| By: | Arnaud Costinot; Dave Donaldson |
| Abstract: | In this paper we develop a new approach to measuring the gains from economic integration based on a generalization of the Ricardian model in which heterogeneous factors of production are allocated to multiple sectors in multiple local markets based on comparative advantage. We implement this approach using data on crop markets in approximately 2,600 U.S. counties from 1880 to 1997. Central to our empirical analysis is the use of a novel agronomic data source on predicted output by crop for small spatial units. Crucially, this dataset contains information about the productivity of all units for all crops, not just those that are actually being grown—an essential input for measuring the gains from trade. Using this new approach we find substantial long-run gains from economic integration among US agricultural markets, benefits that are similar in magnitude to those due to productivity improvements over that same period. |
| JEL: | F0 F1 F11 F15 F17 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22946&r=eff |
| By: | Hanson, Torbjørn (Norwegian Defence Research Establishment (FFI)) |
| Abstract: | The ability of public sector policy makers to prioritize has a huge impact on the effectiveness of public service provision. Public services can take the form of final outputs demanded by consumers or of intermediate outputs contributing to a process of realizing the higher goals of society. In doing the right things, policy makers choose a mix of Intermediate outputs maximizing their preference value for public service outcomes, while managers do things right when responsible for producing outputs efficiently. This distinction enables us to pinpoint important reasons for inefficiencies in the provision of public services. Taking advantage of the method of scenario based planning, a model for measuring effectiveness is developed for situations where traditional methods such as two-stage regressions fail due to long time lags and lack of variation in the variables. Scenarios take the role of outcomes in the modeling of outcome mapping functions, where each scenario represents a set of environmental variables. The model is specified for the provision of defense outcomes, where the lag between changes in input and impacts on outcomes are significant. From a sample of 12 combat units in the Norwegian Armed Forces, producing different outputs, we find that inefficiencies in output mix can explain most of the changes in overall effectiveness over a four-year period of time. |
| Keywords: | Output mix efficiency; Efficiency; DEA; Military |
| JEL: | C60 D24 H40 |
| Date: | 2016–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2016_014&r=eff |
| By: | Nat Moser (UCL School of Slavonic and East European Studies) |
| Abstract: | This paper examines enterprise performance in Russian oil companies between 1992 and 2012. The analysis is based upon longitudinal trend output data, and distinguishes between four different types of owners - outsider private, insider private, federal state and regional state. In comparison with previous studies which considered just 1999-2004, and identified outsider private companies as the best performers, this paper finds that over the longer period 1992-2012 federal state and insider private owned companies actually performed best. The explanation for this relates to ‘institutions’ and the business environment. |
| Keywords: | Oil; Russia |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:see:wpaper:2015:133&r=eff |
| By: | Juan Aparicio (Center of Operations Research (CIO), Universidad Miguel Hernández de Elche); Javier Barbero (European Commission - JRC); Magdalena Kapelko (Institute of Applied Mathematics, Department of Logistics, Wroclaw University of Economics); Jesús T. Pastor (Center of Operations Research (CIO), Universidad Miguel Hernández de Elche); José L. Zofío (Departamento de Análisis Económico: Teoría Económica e Historia Económica. Universidad Autónoma de Madrid) |
| Abstract: | Over the last twenty years an accelerating number of studies have relied on the standard definition of the Malmquist-Luenberger index proposed by Chung et al. (1997) [J. Environ. Manage., 51 229-240], to assess environmental sensitive productivity change. While recent contributions have shown that it suffers from relevant drawbacks related to inconsistencies and infeasibilities, no one has studied systematically the performance of the original model, and to what extent the existing results are unreliable. This paper introduces the optimization techniques that allow implementing the first model solving these problems, and using a country level database including air pollutants, systematically compares the results obtained with both approaches. We discuss the relative number, magnitude and significance of the disparities that researchers should expect if resorting to the original model. Results show that inconsistencies and infeasibilities in the original model are increasing in the number of undesirable outputs included, reaching remarkable values that seriously question the reliability of results, and compromise any policy recommendation based on them. |
| Keywords: | Malmquist-Luenberger Index, Technical Change, Data Envelopment Analysis, Computational Analysis |
| JEL: | C61 D24 O47 Q53 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc104083&r=eff |
| By: | Ozili, Peterson K |
| Abstract: | This paper examine the relationship between non-performing loans (NPLs) and financial (sector) development. The study is motivated by the scant knowledge on how financial development structures impact non-performing loans across banking sectors around the world. In the pooled full country empirical analysis, we find that (i) private credit to GDP ratio is positively associated with non-performing loans, (ii) NPLs are inversely associated with bank efficiency, loan loss coverage, banking competition and banking system stability, and (iii) NPL is positively associated with foreign bank presence, banking crises and bank concentration. We also find that efficient and stable banking sectors experience higher non-performing loans. In the regional empirical analysis, NPLs are negatively associated with regulatory capital ratio and bank liquidity while the graphical analysis show that NPLs are inversely related to financial development and profitability in several regions. |
| Keywords: | Non-performing loans; credit risk; financial development; banking crisis; foreign banks; financial intermediation; banking sector development; efficiency; liquidity; asset quality; bank concentration, banking stability; Sub-saharan Africa; MENA; Europe; Asia-Pacific; Latin America |
| JEL: | E3 E32 E6 G1 G2 G21 |
| Date: | 2017–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:75964&r=eff |
| By: | Førsund, Finn (Dept. of Economics, University of Oslo); Krivonozhko, Vladimir W (National University of Science and Technology «MISiS», Moscow, Russia); Lychev, Andrey V. (National University of Science and Technology «MISiS», Moscow, Russia) |
| Abstract: | Some inadequate results may appear in the DEA models as in any other mathematical model. In the DEA scientific literature several methods were proposed to deal with these difficulties. In our previous paper, we introduced the notion of terminal units. It was also substantiated that only terminal units form necessary and sufficient sets of units for smoothing the frontier. Moreover, some relationships were established between terminal units and other sets of units that were proposed for improving the frontier. In this paper we develop a general algorithm for smoothing the frontier. The construction of algorithm is based on the notion of terminal units. Our theoretical results are verified by computational results using real-life data sets and also confirmed by graphical examples. |
| Keywords: | Data Envelopment Analysis (DEA; Terminal units; Anchor units; Exterior units |
| JEL: | C44 C61 D24 |
| Date: | 2016–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2016_011&r=eff |
| By: | Salvador Barrios (European Commission - JRC); Diego d'Andria (European Commission - JRC) |
| Abstract: | Base erosion and profit shifting (BEPS) undermines tax revenues collection and raise public discontent in times when the tax burden has increased significantly for households in most developed economies. In such context the need to have dependable estimations of profit shifting is warranted both in order to quantify the extent of BEPS and to devise policy measures in order to tackle it. Several studies have assessed the sensitivity of profit shifting activities by multinational companies. Earlier studies have tended to rely on cross-sections of firms, while more recent researches have exploited panel data and, on average, found lower semi-elasticities. The latter has sometimes been interpreted as evidence of a decline in profit shifting during the more recent period. In this paper we argue that such interpretation might be far-fetched and we show that these results can largely be attributed to differences in methods and data used. Our evidence suggests instead that the variability in profit shifting rests primarily on sector heterogeneity and that this may have important methodological and policy implications. We propose an alternative estimation strategy based on multilevel regression analysis exploiting cross-sectoral heterogeneity to yield more robust estimates of profit shifting elasticities. Our multilevel estimates point to an overall semi-elasticity of about -0.47, meaning that for a rise in CIT rate of 10% we expect pre-tax profits to decrease by 4.7%. Our semi-elasticity is lower than the "consensus" estimate of -0.8 and in line with more recent studies that exploit panel data. We find that the semi-elasticities vary significantly across industries with a standard deviation more than ten times the estimated average semi-elasticity. When comparing transfer pricing activities with financial shifting we find the former to be much more sensitive to the tax rate than the latter. We also find that the presence of intangible assets affects transfer pricing elasticities but only when the firm belongs to specific industries. |
| Keywords: | corporate tax, profit shifting, econometrics, multinationals |
| JEL: | H25 F23 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:taxref:201607&r=eff |
| By: | Stavrakoudis, Athanassios; Panagiotou, Dimitrios |
| Abstract: | The objective of this study is to measure the amount of market power exercised by the U.S. red meatpacking industry using the recently developed stochastic frontier estimator of market power. The aggregate degree of market power in both the input market (cattle and hogs) and the output market (beef and pork) is estimated using annual time series data for the period 1970- 2009. The empirical results reveal that the farm-to-wholesale price spread is 4.91% and 4.16% above the marginal processing costs, in the beef and pork packing industries, respectively. These findings indicate that rather a small percentage of the farm-to-wholesale price spread can be attributed to market power in both U.S. meat packing sectors. |
| Keywords: | beef; pork; stochastic frontier analysis; market power |
| JEL: | C13 L66 Q11 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:75997&r=eff |
| By: | In Hwan Jo (National University of Singapore); Tatsuro Senga (Queen Mary University of London) |
| Abstract: | Access to external finance is a major obstacle for small and young firms; thus, providing subsidized credit to small and young firms is a widely-used policy option across countries. We study the impact of such targeted policies on aggregate output and productivity and highlight indirect general equilibrium effects. To do so, we build a model of heterogeneous firms with endogenous entry and exit, wherein each firm may be subject to forward-looking collateral constraints for their external borrowing. Subsidized credit alleviates credit constraints small and young firms face, which helps them to achieve the efficient and larger scale of production. This direct effect is, however, either reinforced or offset by indirect general equilibrium effects. Factor prices increase as subsidized firm demand more capital and labor. As a result, higher production costs induce more unproductive incumbents to exit, while replacing them selectively with productive entrants. This cleansing effect reinforces the direct effect by enhancing the aggregate productivity. However, the number of firms in operation decreases in equilibrium, and this, in turn, depresses the aggregate productivity. |
| Keywords: | Firm dynamics, Misallocation, Financial frictions, Firm size and age |
| JEL: | E22 G32 O16 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp809&r=eff |
| By: | Jean-Pierre Aubry; Caroline V. Crawford |
| Abstract: | In the wake of the financial crisis, many state and local pension plans have reduced benefits and increased required employee contributions to curb rising employer costs. While past research suggests that most state plans have made some changes, little information is available about reforms at the local level.1 This brief documents and compares the reform patterns for over 200 major state and local plans between 2009 and 2014 and investigates how and why the changes were made. The discussion proceeds as follows. The first section describes the data and methodology. The second section provides background on legal protections that might impede changes in benefits for current employees. The third section catalogues and compares the benefit reforms made since the financial crisis – separately assessing reforms applied to current employees and to new hires. The fourth section introduces a regression analysis to better understand what factors have motivated both reforms overall and reforms aimed at current employees. The fifth section presents the regression results. The final section concludes that, unsurprisingly, the biggest factor related to reforms overall was the cost of the plan relative to the total revenue of its sponsoring government, while the main factor related to reforms for current employees was the strength of state legal protections for benefits. |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ibslp54&r=eff |