nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2017‒04‒30
ten papers chosen by

  1. Crop Diversification and Technical Efficiency in Afghanistan: Stochastic Frontier Analysis By Hayatullah Ahmadzai
  2. X-efficiency and economies of scale in pension fund administration and investment By Gosse A.G. Alserda; J.A. Bikker; Fieke (S.G.) van der Lecq
  3. CIMB Bank Performance: Relationship between GDP, Leverage Ratio and Operating Efficiency Ratio to Profitability By Dinson, Syaza Laila
  4. Offshore Profit Shifting and Domestic Productivity Measurement By Fatih Guvenen; Raymond J. Mataloni, Jr.; Dylan G. Rassier; Kim J. Ruhl
  5. Creditor Rights, Technology Adoption, and Productivity: Plant-Level Evidence By Nuri Ersahin
  6. Urban Wage Premium Revisited: Evidence from Japanese matched employer-employee data By KONDO Keisuke
  7. The Economic Effects of Labor Force Enhancement in the Asia-Pacific Region by Trade Liberalization By Sung , Hankyoung
  8. Working Capital Management during Financial Crises: Evidence from Japan By TSURUTA Daisuke
  9. The Rent Impact of Disclosing Energy Performance Certificates: Energy Efficiency and Information Effects By Luisa Dressler; Elisabetta Cornago
  10. The Cross Section of Bank Value By Mark Egan; Stefan Lewellen; Adi Sunderam

  1. By: Hayatullah Ahmadzai
    Abstract: Using Stochastic Frontier Analysis (SFA), this paper centered on analysing the impact of Crop Diversification (CD) on farm level technical efficiency in Afghanistan. Data from a household level survey conducted in 2013-2004 by the Central Statistic Organization (CSO) is used in the analysis. The results revealed that adoption of a diversified portfolio of crops by the farmers significantly improves technical efficiency. In addition, access to extension services, farm size, cattle, oxen and tractor ownership by the farm households, and regional variables were other important factors that significantly affect technical efficiency. It is evident from the results that the estimated technical efficiency indices from the preferred truncated normal distribution range from 1.5% to 99.29%, with a sample mean of 71.9%. The basic SFA model was investigated for potential endogeneity in crop diversification. Instrumental Variable (IV) method was employed to correct for endogeneity in crop diversification. The results of the IV estimation reveal that failing to account for endogeneity in the basic model leads to a downward bias which is consistent with attenuation bias (measurement error in CD implies that OLS coefficients are biased towards zero, so one would predict IV coefficients greater in absolute size). The results of crop diversification index showed the presence of a relatively low level of crop diversification. Maximum likelihood estimation of translog stochastic frontier model shows that land, labour, and other purchased inputs (fertilizer, seeds, pesticides usage) have positive impact on farm revenues. The results show an evidence of constant returns to scale.
    Keywords: Agricultural economics, Afghanistan, applied econometrics, technical efficiency, crop diversification JEL Classification: O12, Q12, O13, Q18, D24
    Date: 2017
  2. By: Gosse A.G. Alserda; J.A. Bikker; Fieke (S.G.) van der Lecq
    Abstract: Pension funds’ operating costs come at the cost of benefits, so it is crucial for pension funds to operate at the lowest cost possible. In practice, we observe substantial differences in costs per member for Dutch pension funds, both across and within size classes. This paper discusses scale inefficiency and X-inefficiency using various approaches and models, based on a unique supervisory data set, which distinguishes between administrative and investment costs. Our estimates show large economies of scale for pension fund administrations, but modest diseconomies of scale for investment activities. We also found that many pension funds have substantial X-inefficiencies for both administrative and investment activities. The two kinds of inefficiency differ across types of pension funds. Therefore, most pension funds should be able to improve their cost performance, and hence increase pension benefits
    Keywords: Efficiency, operating costs, cost elasticity, stochastic cost frontier analysis, optimal scale
    Date: 2017–02
  3. By: Dinson, Syaza Laila
    Abstract: The purpose of this study is to examine the overall performance of CIMB Bank with a specific factor such as GDP, leverage performance and operating performance that impact the profitability performance CIMB Bank. The data obtained from the annual report and the financial report of CIMB Bank starting from 2011 to 2015. The measurement such as leverage ratio and operating efficiency ratio is used to see the overall performance of CIMB Bank in five years. Data was analysed by utilising regression and bivariate correlation. The regression analysis and bivariate correlation show that the operating performance which measured by operating efficiency ratio with the P highest impact on the profitability of CIMB Bank. While the two variables which are GDP and leverage performance has no significant and low impact to the CIMB Bank Profitability.
    Keywords: Operational Risk, Leverage Ratio, Operating Efficiency Ratio, Profitability
    JEL: G21
    Date: 2017–04–13
  4. By: Fatih Guvenen; Raymond J. Mataloni, Jr.; Dylan G. Rassier; Kim J. Ruhl
    Abstract: Official statistics display a significant slowdown in U.S. aggregate productivity growth that begins in 2004. In this paper, we investigate a source of mismeasurement in official statistics, which arises from offshore profit shifting by multinational enterprises operating in the United States. This profit shifting causes part of the economic activity generated by these multinationals to be attributed to their foreign affiliates, leading to an understatement of measured U.S. gross domestic product. Profit-shifting activity has increased significantly since the mid-1990s, resulting in an understatement of measured U.S. aggregate productivity growth. We construct adjustments to correct for the effects of profit shifting on measured gross domestic product. The adjustments raise aggregate productivity growth rates by 0.1 percent annually for 1994–2004, 0.25 percent annually for 2004–2008, and leave productivity unchanged after 2008; Our adjustments mitigate, but do not overturn, the productivity slowdown in the official statistics. The adjustments are especially large in R&D-intensive industries, which are most likely to produce intangible assets that are easy to move across borders. The adjustments boost value added in these industries by as much as 8.0 percent annually in the mid-2000s.
    JEL: E01 E24 F23 O4
    Date: 2017–04
  5. By: Nuri Ersahin
    Abstract: I analyze the impact of strengthening of creditor rights on productivity using plant-level data from the U.S. Census Bureau. Following the adoption of anti-recharacterization laws that improve the ability of lenders to access the collateral of the firm, total factor productivity of treated plants increases by 2.6 percent. This effect is mainly observed among plants belonging to financially constrained firms. Furthermore, treated plants invest in capital of younger vintage and newer technology, and become more capital-intensive. My results suggest that strengthening of creditor rights leads to a relaxation in borrowing constraints, and helps firms adopt a more efficient production technology.
    Keywords: Creditor Rights; Productivity; Anti-Recharacterization Laws; Bankruptcy
    JEL: D24 G32 G33 K22
    Date: 2017–01
  6. By: KONDO Keisuke
    Abstract: Recent studies on the empirics of agglomeration economies have assumed a two-step channel of the urban wage premium in which agglomeration increases total factor productivity (TFP) and results in higher wages. Therefore, the present study empirically examines the validity of this two-step channel via TFP and investigates other channels of the urban wage premium by using matched employer-employee data in the Japanese manufacturing sector. The findings show that the standard wage regression approach used in the literature captures not only the TFP channel of the urban wage premium but also other effects (e.g., firm size effects on wage). Furthermore, when this TFP channel is quantified, the city size elasticity of wage becomes smaller than those in the existing literature. The implication of this study is that, by exploiting the features of the Japanese employment system, it is possible to obtain interesting results concerning the urban wage premium, especially in regard to basic pay and bonuses.
    Date: 2017–03
  7. By: Sung , Hankyoung (University of Seoul)
    Abstract: This paper uses the most recent Global Trade Analysis Project (GTAP) DB version 9 and a recursive dynamic computable general equilibrium model (CGE) to analyze the economic effect of enhancement in labor productivity that trade liberalization has in the APEC. In particular, unlike the previous studies that apply tariff reduction, this paper focuses on the changes in labor productivity reported by Ahn et al. (2016). The results show an increase in the real GDP of countries with gains in labor productivity. In particular, the results of this study indicate that the benefits of trade liberalization would be even larger for developed countries with a similar level of gains in labor productivity. It is also suggested that the efficiency of production structure or scale of economy may work for developed economies. In conclusion, this paper suggests another reason to pursue trade liberalization within in the APEC region.
    Keywords: Labor Productivity; Dynamic CGE Model; Trade Liberalization; Real GDP
    Date: 2016–11–30
  8. By: TSURUTA Daisuke
    Abstract: This paper demonstrates the adjustment speed of firm working capital and the relationships between working capital and firm performance in Japan during the recent global financial crisis. During this period, working capital possibly was excessive and therefore harmful to firm performance given the sudden decrease in sales. Using quarterly firm-level data, we find that the adjustment of working capital was weaker during the crisis. Moreover, the negative relationship between excess working capital and firm performance became more significant during the crisis, especially for larger firms. However, we find no evidence for similar observations after late 2009, suggesting that this crisis-related, working capital-firm performance effect does not last long. To finance excessive working capital, firms borrow funds from banks and reduce their internal cash during periods of both crisis and non-crisis.
    Date: 2017–03
  9. By: Luisa Dressler; Elisabetta Cornago
    Abstract: Energy performance certificates (EPC) can help solve information asymmetries between landlords and tenants about dwellings’ energy performance. EPCs may enable rent premiums for energy efficient dwellings, incentivizing energy efficiency investment in rental property. However, low EPC disclosure rates may undermine their potential to promote investment. Using a cross-sectional dataset of residential rental advertisements from Brussels, we estimate rent premiums from EPCs under de facto voluntary EPC disclosure. We use the Heckman correction and an instrumental variable approach to tackle potential selection bias and endogeneity. First, we find that highly energy-efficient compared to inefficient dwellings earn a rent premium, provided that EPCs are disclosed (energy efficiency effect). This premium may incentivize investment in energy efficiency of rental property. Second, dwellings with average energy performance are penalized from disclosing an EPC (information effect). This may provide a strategic motivation to hide EPCs that indicate mediocre energy performance.
    Keywords: asymmetric information; voluntary information disclosure; energy performance certificates; energy efficiency
    JEL: C21 D82 Q48 R31
    Date: 2017–04
  10. By: Mark Egan; Stefan Lewellen; Adi Sunderam
    Abstract: We study the determinants of value creation within U.S. commercial banks. We focus on three theoretically-motivated drivers of bank value: screening and monitoring, "safe" deposit production, and synergies between deposit-taking and lending. To assess the relative contributions of each, we develop novel measures of banks' deposit productivity and asset productivity and use these measures to evaluate the cross-section of bank value. We find that variation in deposit productivity explains the majority of variation in bank value, consistent with theories emphasizing safe-asset production. We also find evidence of meaningful value creation from synergies between deposit-taking and lending. Overall, our findings suggest that banks are primarily "special" due to their unique liability structure rather than their ability to screen and monitor borrowers.
    JEL: G2 G21
    Date: 2017–03

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