nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2017‒10‒08
nineteen papers chosen by

  1. Competition, Selection, and Productivity Growth in the Chilean Manufacturing Industry By Roberto Álvarez; Aldo González
  2. The costs of annuitizing By Cecilia Dassatti; Rodrigo Lluberas
  3. Capital productivity in industrialized economies: evidence from error-correction model and Lagrange Multiplier tests By Trofimov, Ivan D.
  4. Credit misallocation during the European financial crisis By Fabiano Schivardi; Enrico Sette; Guido Tabellini
  5. A Long-Run Perspective on the Spatial Concentration of Manufacturing Industries in the United States. By Crafts, Nicholas; Alexander Klein, Alexander
  6. Healthy Business? Managerial Education and Management in Healthcare By Nicholas Bloom; Renata Lemos; Raffaella Sadun; John Van Reenen
  7. Investment-Specific Technical Change and Growth around the World By Samaniego, Roberto M; Yu Sun, Juliana
  8. Enabling Factors in Firms Adoption of New Digital Technologies. An Empirical Inquiry on a Manufacturing Region By Giancarlo Corò; Dejan Pejcic; Mario Volpe
  9. "Sustainable Business of Islamic Bank Through on the Islamic Corporate Governance and Islamic Financial Performance" By Indra Siswanti
  10. Financial development and total factors productivity channel: Evidence from Africa By EZZAHID, Elhadj; ELOUAOURTI, Zakaria
  11. R&D Cyclicality and Composition Effects: A Unifying Approach By Nikolay Chernyshev
  12. The measurement of labour content : a general approach By Naoki Yoshihara; Roberto Veneziani
  13. "Modeling the Effect of Healthcare Expenditure and Education Expenditure on Labour Productivity: A Study on OIC Countries" By Abdul Azeez Oluwanisola Abdul Wahab
  14. Government support and firm financial performance: New evidence from a transitional economy By Nguyen Trong, Co; Vu Van, Huong; Bartolacci, Francesca
  15. "The Impact of Minimum Wage Policy on Small Medium Enterprises’ Productivity in the Manufacturing Sector" By Ung Leng Yean
  16. "Determinant Factors of Trade Industry Performance in Indonesia: AHP Approach" By Malik Cahyadin
  17. "State Ownership, Family Ownership, and Sustainability Report Quality, The Moderating Role of Board Effectiveness" By Astrid Rudyanto
  18. "Job Satisfaction and Absenteeism on the Performance of Lecturer in Private Higher Education in Semarang" By Arnis Budi Susanto
  19. "Profit and Loss Sharing System - Solution for Trade-offs between Banking Profitability and Economic Efficiency of Intermediation" By Asfi Manzilati

  1. By: Roberto Álvarez; Aldo González
    Abstract: Recent evidence for several countries shows a decline in TFP growth. However, there is not much evidence for developing countries and much less regarding the impact of competition in product markets. In this paper, we analyze the impact of competition on selection and productivity growth in Chile. Our results indicate that competition has a positive effect on TFP growth and the probability of exit for lagging firms. Our results are robust to alternative methodologies for calculating TFP and to the inclusion of other variables that may affect firms’ TFP growth.
    Date: 2017–09
  2. By: Cecilia Dassatti (Banco Central del Uruguay); Rodrigo Lluberas (Banco Central del Uruguay)
    Abstract: This study analyzes the costs associated with annuitization and provides estimates of the margin that an efficient insurance company could charge in order to cover these costs. Using data from the financial statements filed by insurance companies to the regulator, we estimate a translog cost function following the stochastic frontier methodology. Our dataset consists on quarterly balance sheet information from 13 Uruguayan insurance companies over the period 2005-2015. We find that the average cost inefficiency is 17.8% and that there is substantial heterogeneity across firms. In addition, our results show that the annuity margin that an efficient insurance company could charge in order to cover its administrative costs is of 11 basis points over the market long-term interest rate.
    Keywords: annuities, insurance firms, annuity margin, stochastic frontier, cost effciency
    JEL: D24 G22 G28 H55
    Date: 2016
  3. By: Trofimov, Ivan D.
    Abstract: The paper re-examines the “stylized facts” of the balanced growth in developed economies, looking specifically at capital productivity variable. The economic data is obtained from European Commission AMECO database, spanning 1961-2014 period. For a sample of 22 OECD economies, the paper applies univariate LM unit root tests with one or two structural breaks, and estimates error-correction and linear trend models with breaks. It is shown that diverse statistical patterns were present across economies and overall mixed evidence is provided as to the stability of capital productivity and balanced growth in general. Specifically, both upward and downward trends in capital productivity were present, while in several economies mean reversion and random walk patterns were observed. The data and results were largely in line with major theoretical explanations pertaining to capital productivity. With regard to determinants of the capital productivity movements, the structure of capital stock and the prices of capital goods were likely most salient.
    Keywords: Capital productivity, structural breaks, unit root tests, growth
    JEL: C12 C22 N10 O47
    Date: 2017–09–29
  4. By: Fabiano Schivardi (EIEF, LUISS); Enrico Sette (Bank of Italy); Guido Tabellini (Bocconi)
    Abstract: Do banks with low capital extend excessive credit to weak firms, and does this matter for aggregate efficiency? Using a unique dataset that covers almost all bank-firm relationships in Italy in the period 2004-2013, we find that during the Eurozone financial crisis (i) under-capitalized banks were less likely to cut credit to non-viable firms; (ii) credit misallocation increased the failure rate of healthy firms and reduced the failure rate of non-viable firms; and (iii) nevertheless, the adverse effects of credit misallocation on the growth rate of healthier firms were negligible, as were the effects on TFP dispersion. This goes against previous influential findings, which, we argue, face serious identification problems. Thus, while banks with low capital can be an important source of aggregate inefficiency in the long run, their contribution to the severity of the great recession via capital misallocation was modest.
    Keywords: Bank capitalization, zombie lending, capital misallocation
    JEL: D23 E24 G21
    Date: 2017–09
  5. By: Crafts, Nicholas (University of Warwick); Alexander Klein, Alexander (University of Kent)
    Abstract: We construct spatially-weighted indices of the geographic concentration of U.S. manufacturing industries during the period 1880 to 1997 using data from the Census of Manufactures. Several important new results emerge from this exercise. First, we find that average spatial concentration was much lower in the late 20th- than in the late 19th-century and that this was the outcome of a continuing reduction over time. Second, the persistent tendency to greater spatial dispersion was characteristic of most manufacturing industries. Third, even so, economically and statistically significant spatial concentration was pervasive throughout this period.Keywords: manufacturing belt; spatial concentration; transport costs. JEL Classification: N62; N92; R12.
    Date: 2017
  6. By: Nicholas Bloom; Renata Lemos; Raffaella Sadun; John Van Reenen
    Abstract: We investigate the link between hospital performance and managerial education by collecting a large database of management practices and skills in hospitals across nine countries. We find that hospitals that are closer to universities offering both medical education and business education have higher management quality, more MBA trained managers and lower mortality rates. This is true compared to the distance to universities that offer only business or medical education (or neither). We argue that supplying joint MBA-healthcare courses may be a channel through which universities increase medical business skills and raise clinical performance.
    Keywords: management, hospitals, mortality, education
    JEL: M1 I1
    Date: 2017–09
  7. By: Samaniego, Roberto M (The George Washington University); Yu Sun, Juliana (School of Economics, Singapore Management University)
    Abstract: Investment-specific technical change (ISTC) contributes little to growth in most countries. This is because in many countries the investment process does not become notably more efficient over time. Still, cross-country differences in the contribution of ISTC to growth are significant. Differences in the rate of ISTC appear due to cross-country variation in the use of R&D intensive capital goods, as well as trade costs.
    Keywords: Price of capital; investment-specific technical change; growth accounting; sources of growth; natural resources; trade costs.
    JEL: F43 O11 O13 O16 O33 O41 O47
    Date: 2016–04–28
  8. By: Giancarlo Corò (Department of Economics, University Of Venice Cà Foscari); Dejan Pejcic (Department of Economics, University Of Venice Cà Foscari); Mario Volpe (Department of Economics, University Of Venice Cà Foscari)
    Abstract: This paper provides an analysis on the diffusion of the last generation digital technologies (Industry 4.0) in the Veneto region, one of the main manufacturing territory in Italy. Our attention focuses on factors that enable firms to adopt these technologies, with attention to three main aspects: the human capital endowment, the international openness, and the financial structure. Empirical analysis is based on a sample of firms that operate in manufacturing, construction and business services. Our analysis shows a heterogeneous diffusion of Industry 4.0 technologies across different industries, allowing the identification of distinct technologies frontiers among sectors. The logit regression shows a positive relation between the adoption of digital technologies and the openness to international markets, as well as with a highly skilled and highly educated human capital. The digital users show better productivity indexes than other firms, but at the same time financial performances are less clear. Hence, the firms that adopt new digital technologies have a more balanced financial structure, but they do not show higher profitability ratios than non-users. This result depends on a longer run return on investment and in a different distributive policy inside the firm.
    Keywords: Digital innovation, Industry 4.0, Enabling factors, Technological upgrading
    JEL: O33 L60 J24
    Date: 2017
  9. By: Indra Siswanti (Management, Perbanas University, Indonesia Author-2-Name: Ubud Salim Author-2-Workplace-Name: Faculty of Economics and Business, University of Brawijaya, Indonesia Author-3-Name: Eko Ganis Sukoharsono Author-3-Workplace-Name: Faculty of Economics and Business, University of Brawijaya, Indonesia Author-4-Name: Siti Aisjah Author-4-Workplace-Name: Faculty of Economics and Business, University of Brawijaya, Indonesia)
    Abstract: "Objective – The objective of the study is to analyze the application of Islamic Corporate Governance (ICG) on Sustainable Business, focusing on Islamic Financial Performance as a mediating variable in Islamic Banks in Indonesia. Methodology/Technique – The population and sample in the study consists of 9 Islamic Banks. The study uses partial least square (PLS), and the data is collected from public reports for the period between 2010 and 2015. The variables of the study are: Islamic Corporate Governance as an independent variable, Sustainable Business as the dependent variable and Financial Performance as a mediating variable. Findings – The study shows that Islamic Corporate Governance (ICG) has a positive significant effect on Islamic Financial Performance, Islamic Corporate Governance (ICG) has no effect on Sustainable Business, and Islamic Financial Performance has a positive effect on Sustainable Business. The findings also show that Islamic Financial Performance can have an indirect impact to mediating the effect of Islamic Corporate Governance on Sustainable Business Islamic Bank. Novelty – Using Murabahah ratio to measure Islamic Financial Performance."
    Keywords: Islamic Corporate Governance; Islamic Financial Performance; Sustainable Business.
    JEL: G21 L22 M41
    Date: 2017–05–04
  10. By: EZZAHID, Elhadj; ELOUAOURTI, Zakaria
    Abstract: We explore the links between financial development and economic growth through Total Factors Productivity canal in African economies. First, we use a composite index to gauge the levels of financial development in 40 African economies during the period 2004-2014. Second, we study the Finance-Total Factors Productivity (TFP) relationship in a panel of 22 economies classified by their income level. The main results of our study show that financial development in Africa promotes economic growth, improves the allocation investment, and stimulates total factors productivity, but affects negatively saving mobilization. Results by group of countries show that financial development does not promote total factors productivity in low-income and upper-middle-income countries. For low-income countries, this is due to the inadequacy of financial services available to the needs of economic agents. For the second category of countries, this result is probably due to the fact that the financial system is biased toward the formal sector, which does not make enough efforts to increase TFP. The Finance-TFP relationship is significantly positive in the lower middle-income countries. the reforms of African financial systems have to be designed and directed to increase the adequacy of financial services to the needs of each economy and its development level. Financial sectors should encourage the accumulation of inputs in factors-driven economies, improve the reallocation of resources to high-productivity sectors in efficiency-driven economies, and finance Innovation in innovation-driven economies.
    Keywords: Total Factors Productivity, financial development, financial composite index, economic growth, Africa.
    JEL: C01 G2
    Date: 2017
  11. By: Nikolay Chernyshev (University of St Andrews)
    Abstract: Existing empirical studies do not concur on whether R&D spending is procyclical or countercyclical: the former hypothesis is supported by studies of aggregate R&D spending, whereas the latter is vindicated by firm-level evidence. In this paper, we reconcile the two facts by advancing a general equilibrium framework, in which, while a single firm's R&D spending profile is countercyclical, aggregate R&D spending is procyclical owing to procyclical fluctuations in the number of R&D performers. Our findings suggest that economic crises might be beneficial for economic performance by fostering individual R&D effort. An advantage of our framework is that it brings together conflicting pieces of empirical evidence, while incorporating and building upon Schumpeter's hypothesis of countercyclical innovation.
    Keywords: Economic cycles, opportunity cost hypothesis, procyclicality of R&D, countercyclicality of R&D
    JEL: E23 E32 L13 L23 O31
    Date: 2017–09–27
  12. By: Naoki Yoshihara (University of Massachusetts Amherst); Roberto Veneziani (Queen Mary University of London)
    Abstract: This paper analyses the theoretical issues related to the measurement of labour content for general technologies with heterogeneous labour. A novel axiomatic framework is used in order to formulate the key properties of the notion of labour content and analyse its theoretical foundations. The main measures of labour content used in various strands of the literature are then characterised. Quite surprisingly, a unique axiomatic structure can be identified which underlies measures of labour aggregates used in such diverse fields as neoclassical growth theory, input-output approaches, productivity analysis, and classical political economy.
    Keywords: labour content, labour productivity, technical change, axiomatic analysis.
    JEL: D57 J24 O33 D46
    Date: 2017
  13. By: Abdul Azeez Oluwanisola Abdul Wahab (Faculty of Economics and Muamalat, Universiti Sains Islam, Malaysia Author-2-Name: Zurina Kefeli Author-2-Workplace-Name: Faculty of Economics and Muamalat, Universiti Sains Islam, Malaysia)
    Abstract: "Objective – The possibility of healthcare expenditure and education expenditure are becoming a thought-provoking issue for numerous governments globally, in spite of the fact that healthcare is unique and vital rudiments of well-being. On the other hand, education is the strength and spinal column of ground-breaking thoughts. Nevertheless, with an ageing population and ballooning protracted health difficulties, the preservation of the quality of life demands improved healthcare and education expenditure on the part of government. However, this study scrutinizes the effect of healthcare expenditure and education expenditure on labour productivity using Organization of Islamic Cooperation (OIC) countries as a case study. Methodology/Technique – The research utilized pooled-panel data method with data from 1990 to 2015. Findings – The result of the findings shows that there is the statistical significant relationship between healthcare expenditure, education expenditure and labour productivity in OIC countries. Novelty – Research suggests that healthcare and education is a mechanism to stimulate the productivity of labour in OIC countries."
    Keywords: Education Expenditure; Healthcare Expenditure; Labour Productivity; OIC Countries.
    JEL: H51 H52 J24
    Date: 2017–03–23
  14. By: Nguyen Trong, Co; Vu Van, Huong; Bartolacci, Francesca
    Abstract: Using a panel dataset of five waves of private manufacturing SMEs surveys in the period 2007-15, this paper contributes to literature by considering for the first time the effects of government support on firms’ financial performance in Vietnam. Interestingly, contrary to the many findings of previous studies, we find that government assistance affect firms’ financial performance after controlling for heterogeneity, unobservable factors and dynamic endogeneity. This finding supports for the viewpoints of institutional theory. Also, the study shows that technical supports from government such as export promotion, human resource training and technology programmes have insignificant linkages with firm financial performance, but financial supports play an important role, suggesting that supporting measures as tax exemptions, soft loans and investment incentives promote financial efficiency and are vital for the development of Vietnamese private SMEs.
    Keywords: Government support, innovation, firm financial performance, SMEs, Vietnam
    JEL: D22 G3
    Date: 2017–10–03
  15. By: Ung Leng Yean (Faculty of Accountancy and Management, UTAR, Malaysia Author-2-Name: Tee Peck Ling Author-2-Workplace-Name: Faculty of Accountancy and Management, UTAR, Malaysia Author-3-Name: Chung Chay Yoke Author-3-Workplace-Name: Faculty of Accountancy and Management, UTAR, Malaysia Author-4-Name: Jayamalathi Jayabalan Author-4-Workplace-Name: Faculty of Accountancy and Management, UTAR, Malaysia Author-5-Name: Pok Wei Fong Author-5-Workplace-Name: Faculty of Accountancy and Management, UTAR, Malaysia Author-6-Name: Shamini Kandasamy Author-6-Workplace-Name: Faculty of Accountancy and Management, UTAR, Malaysia)
    Abstract: "Objective – This study’s aim is to identifies the minimum wage policy implementation and its impact on SMEs in Malaysia. It addresses the question of the level of SME’s awareness and their readiness towards the implementation of the policy and improving productivity. Methodology/Technique – Data were collected through questionnaire distribution and literature study. Analysis was conducted via a descriptive method. Findings – The solutions identified in addressing the problem include the need to increase labour productivity, lower operational costs and change organizational methods. Novelty – The discussions of this paper provide an in-depth understanding of the issues related to how the policy affects company’s competitive advantage and financial performance."
    Keywords: Minimum Wage Policy; Malaysia; SMEs, Manufacturing Sectors; Productivity.
    JEL: E24 L60
    Date: 2016–12–24
  16. By: Malik Cahyadin (Faculty of Economics and Business, Universitas Sebelas Maret, Indonesia Author-2-Name: Sutomo Author-2-Workplace-Name: Faculty of Economics and Business, Universitas Sebelas Maret, Indonesia Author-3-Name: Lely Ratwianingsih Author-3-Workplace-Name: Faculty of Economics and Business, Universitas Sebelas Maret, Indonesia)
    Abstract: "Objective – This research analyses determinant factors and priority factors of trade industry performance based on 15 industries in Indonesia. Today, trade industry tends to develop well in Indonesia. It covers exporters, importers, modern markets (hypermarket and minimarket), and traditional markets. Methodology/Technique – This research uses Analytic Hierarchy Process (AHP) to analyse primary data on factors of trade industry performance. Findings – Research results indicate that there are seven factors on trade industry performance. These are NF (AHP score: 0.37), ICT (0.19), BIT (0.10), BR (0.10), BP (0.09), DC (0.08), and BE (0.07). It means that number of firm becomes the first factor while business efficiency becomes the last factor that drives business performance. Novelty – This finding can be used by trade industry associations and policy makers to manage and regulate firms involved in commerce. In addition, governments can support ICT development to improve trade industry performance."
    Keywords: Determinant Factor; Trade Industry; Business Performance; AHP.
    JEL: L11 L25
    Date: 2017–04–06
  17. By: Astrid Rudyanto (Trisakti School of Management, Indonesia)
    Abstract: "Objective – This research analyzes the effect of state ownership, family ownership, and the effectiveness of the board’s moderating role on sustainability report quality of Indonesian companies. Methodology/Technique – Sustainability report quality is a factor analysis of percentage of disclosure quantity score with GRI G3 and G4 (content analysis), the natural logarithm of the number of pages, existence of opinion, and existence of an independent party assessment on GRI application check, independent party assessment. Board effectiveness is divided into three categories: independence, size, and competence. Findings – Using data of 123 companies listed on the Indonesian Stock Exchange between 2010 and 2014, it is found that state ownership, board effectiveness based on independence, and competence positively affect sustainability report quality while family ownership and board effectiveness based on size do not affect sustainability report quality. For board effectiveness moderating role, board effectiveness based on independence and size strengthen state ownership effect on sustainability report quality. Meanwhile, board effectiveness does not weaken family ownership effect on sustainability report quality. Novelty – This research contributes to literature regarding the relationship between corporate governance and sustainability report quality, particularly the effectiveness of a board’s moderating role to sustainability report quality, which is scarcely researched."
    Keywords: "Sustainability Report Quality; State Ownership; Family Ownership; Board Effectiveness; Corporate Governance; Stakeholder."
    JEL: G32 M41 Q56
    Date: 2017–04–12
  18. By: Arnis Budi Susanto (University of Jember, Indonesia. Author-2-Name: Suyatno Author-2-Workplace-Name: STIE AKA Semarang, Citarum No. 44, 50122, Semarang, Indonesia Author-3-Name: Theresia Susetyarsi Author-3-Workplace-Name: STIE Semarang, Menoreh Utara Raya No. 11 50236, Semarang, Indonesia)
    Abstract: "Objective – The lecturer is a key element in higher education. This study aims to examine the relationship of job satisfaction lecturer on the performance of lecturer in private higher education in Semarang. Framework constructs in this study presents a variable relationship to one another, illustrating both individual performance and job satisfaction awoke from elements of soft and hard approach. Methodology/Technique – The sample of this research was determined by using two stage random sampling of 200 lecturers at private higher education in Semarang. Data were analyzed with structural equation modeling (SEM). Findings – The empirical results showed that job satisfaction is able to reduce absenteeism and improve the performance of lecturer in private higher education, both directly and indirectly. Novelty – This research findings supported by original data."
    Keywords: Job Satisfaction; Absenteeism; Job performance, Semerang.
    JEL: I23 J21
    Date: 2017–04–06
  19. By: Asfi Manzilati (Faculty of Economic and Business, Brawijaya University, Indonesia)
    Abstract: "Objective – The higher the difference between the loan interest and the deposit interest is, the better it is for a bank. This reflects a higher margin/profitability. However, it also shows less efficiency of the intermediation mechanism. Using literature research, this study aims to understand how the mechanism of Profit and Loss Sharing System (Islamic Banking System) can become the solution for the trade-off. Methodology/Technique – This study uses literature search and review as the method to gain an understanding of the fundamental concept as well as to offer critique by noting the trade-offs associated with the micro and macro objectives of banking. Findings – In the profit and loss sharing system made accessible through partnership, the returns that will be earned by one part depends on the other part. This requires each part to behave professionally and responsibly. Depositors’ returns depend on banks’ returns and banks’ returns depend on mudharib’s return. Therefore, there is no difference between banking profitability and efficiency of the intermediation. Novelty – With the same implications noted between the micro objective of banks (advantage as a business entity) and the efficiency of intermediation as well as the implications for the affordability and social justice, there is no trade-off between profitability and economic efficiency of intermediation. In addition, the profit and loss sharing system can also be a solution for the trade-off itself."
    Keywords: Profit and Loss Sharing System, Micro-macro Trade-off, Banking Profitability, and the Economic Efficiency of Intermediation.
    JEL: G21 G32
    Date: 2017–03–14

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