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on Efficiency and Productivity |
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Issue of 2019‒05‒27
23 papers chosen by |
| By: | Christian Castro (Banco de España); Jorge E. Galán (Banco de España) |
| Abstract: | We analyse the drivers of total factor productivity of Spanish banks from early 2000, including the last financial crisis and the post-crisis period. This allows us to study changes in productivity following a major restructuring process in the banking sector such as the one experienced in Spain. Overall, we find that following a period of continued growth, productivity declined after the height of the crisis, though large banks were less affected. We also find that risk, capital levels, competition and input prices were important drivers of the differences in productivity change between banks. Finally, our results suggest that, by the end of our sample period, there was still some room for potential improvements in productivity via exploiting scale economies and enhancing cost efficiency. These opportunities appear to be generally greater for the smaller banks in our sample. |
| Keywords: | banking, cost efficiency, crisis, scale economies, productivity |
| JEL: | D24 E58 G01 G21 G28 G34 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1912&r=all |
| By: | Galina Besstremyannaya (CEFIR at New Economic School); Jaak Simm (University of Leuven); Sergei Golovan (New Economic School) |
| Abstract: | The paper proposes a bootstrap methodology for robust estimation of cost efficiency in data envelopment analysis. Our algorithm re-samples "naive" input-oriented efficiency scores, rescales original inputs to bring them to the frontier, and then re-estimates cost efficiency scores for the rescaled inputs. We consider the cases with absence and presence of environmental variables. Simulation analyses with multi-input multi-output production function demonstrate consistency of the new algorithm in terms of the coverage of the confidence intervals for true cost efficiency. Finally, we offer real data estimates for Japanese banking industry. Using the nationwide sample of Japanese banks in 2009, we show that the bias of cost efficiency scores may be linked to the bank charter and the presence of the environmental variables in the model. A package `rDEA', developed in the R language, is available from the GitHub and CRAN repository. |
| Keywords: | data envelopment analysis, cost efficiency, bias, bootstrap, banking |
| JEL: | C44 C61 G21 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:abo:neswpt:w0244&r=all |
| By: | Jean-Philippe BOUSSEMART (Univ. Lille, CNRS, IESEG School of Management and LEM-UMR 9221); Raluca PARVULESCU (IESEG School of Management and LEM-CNRS (UMR 9221)); ; |
| Abstract: | This article seeks to highlight the performance of the farm sector in the main EU countries. Based on the productivity surplus account method (PSAM), our performance analysis includes all elements of the profit and loss account, which is one of the limits of the traditional index number approach. Moreover, this method also shows the way in which productivity gains observed in each country have been distributed among the main stakeholders. A specific focus is on the state’s as well as the farmers’ roles in this distribution game. |
| Keywords: | : productivity surplus accounting method, total factor productivity, agricultural sector, common agricultural policy |
| JEL: | D24 N54 O13 Q18 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:ies:wpaper:e201721&r=all |
| By: | Carlo Ciccarelli (CEIS & DEF University of Rome "Tor Vergata"); Matteo Gomellini (Bank of Italy); Paolo Sestito (Bank of Italy) |
| Abstract: | Population ageing and lack of productivity growth characterize most western countries. We focus on Italy and investigate whether the availability of a young population represents a determinant of manufacturing productivity growth. We follow a historical comparative analysis and provide evidence of the strength of this relation in the past (1861-1911) and today (1961-2011). To account for the sizeable regional heterogeneity characterizing historically the country we use data disaggregated at the provincial level. Our analysis suggests that the availability of a young population represents indeed one of the determinant of manufacturing productivity growth. The strength of the relation was higher in the past than today, but ageing is still nevertheless a factor that cannot be neglected from a policy perspective. |
| Keywords: | manufacturing, productivity, population ageing, Italy. |
| JEL: | O14 J11 N33 N93 |
| Date: | 2019–05–16 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:457&r=all |
| By: | Soroush, G.; Cambini, C.; Jamasb, T.; Llorca, M. |
| Abstract: | It is generally accepted that institutions are important for economic development. However, whether the performance of regulated utilities within a country is affected by the quality of institutions is yet to be investigated thoroughly. We analyse how the quality of regional institutions impact performance of Italian electricity distribution utilities. We use a stochastic frontier analysis approach to estimate cost functions and examine the performance of 108 electricity distribution utilities from 2011 to 2015. This unique dataset was constructed with the help of the Italian Regulator for Energy, Networks, and Environment. In addition, we use a recent dataset on regional institutional quality in Italy. We present evidence that utilities in regions with better government effectiveness, responsiveness towards citizens, control of corruption, and rule of law, also tend to be more cost efficient. The results suggest that national regulators should take regional institutional diversity into account in incentive regulation and efficiency benchmarking of utilities. |
| Keywords: | Institutional quality; stochastic frontier analysis; electricity distribution in Italy; cost efficiency; inefficiency determinants |
| JEL: | D22 L51 L94 O43 |
| Date: | 2019–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1942&r=all |
| By: | Douglas L. Campbell (New Economic School (NES)); Karsten Mau (Maastricht University) |
| Abstract: | Bloom, Draca, and Van Reenen (2016) find that Chinese competition induced a rise in patenting, IT adoption, and TFP by 30% of the total increase in Europe in the early 2000s. We find that the average patents per firm fell by 94% for the most Chinacompeting firms in their sample, but also by 94% for non-competing firms (starting from an initially higher level), and that various intuitive controls, such as controls for sectoral trends, renders the impact on patents-per-firm insignificant. We also find that while TFP appears to be positively correlated with the rise in Chinese competition, IV estimates are inconclusive, and other measures of productivity, such as value-added per worker and profits, are not correlated. Various instrumental and proxy variable approaches also do not support a positive impact of the rise of China on European patents. |
| Keywords: | Patents, China, Europe, Textiles, Trade Shocks, Manufacturing |
| JEL: | F14 F13 L25 L60 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0252&r=all |
| By: | Galina Besstremyannaya (CEFIR at New Economic School); Richard Dasher (Stanford University); Sergei Golovan (New Economic School) |
| Abstract: | A considerable amount of research has shown that that carbon tax combined with research subsidy may be regarded as an optimal policy in view of diffusing low carbon technologies for the benefit of the society. The paper exploits the macro economic approach of the endogenous growth models with technological change for a comparative assessment of these policy measures on the economic growth in the US and Japan in the medium and the long run. The results of our micro estimates reveal several important differences across the Japanese and US energy firms: lower elasticity of innovation production function in R&D expenditure, lower probability of a radical innovation, and larger advances of dirty technologies in Japan. This may explain our quantitative findings of stronger reliance on carbon tax than on research subsidies in Japan relative to the US. |
| Keywords: | endogenous growth, technological change, innovation, carbon tax, energy |
| JEL: | O11 O13 O47 Q43 Q49 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:abo:neswpt:w0245&r=all |
| By: | Balk, B.M.; Zofío, J.L. |
| Abstract: | In this paper a number of meaningful and empirically implementable decom- positions of the cost variation (in difference and ratio form) are developed. The components distinguished are price level change, technical efficiency change, allocative efficiency change, technological change, scale of activity change, and price structure change. Given data from a (balanced) panel of produc- tion units, all the necessary ingredients for the computation of the various decompositions can be obtained by using linear programming techniques. An application is provided. |
| Keywords: | Cost variation, decomposition, efficiency change, technological change, index number theory |
| JEL: | C43 D24 O12 |
| Date: | 2019–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:ems:eureri:116408&r=all |
| By: | Aparicio, J.; Kapelko, M.; Zofío, J.L. |
| Abstract: | This study introduces the measurement of environmental inefficiency from an economic perspective that integrates, in addition to marketed good outputs, the negative environmental externalities associated with bad outputs. We develop our proposal using the latest by- production models that consider two separate and parallel technologies: a standard technology generating good outputs, and a polluting technology for the by-production of bad outputs (Murty et al., 2012). While research into environmental inefficiency incorporating undesirable or bad outputs from a technological perspective is well established, no attempts have been made to extend it to the economic sphere. Our model defines an economic inefficiency measure that accounts for suboptimal behavior in the form of foregone private revenue and social cost excess (environmental damage). We show that economic inefficiency can be consistently decomposed according to technical and allocative criteria, considering the two separate technologies and market prices, respectively. We illustrate the empirical implementation of our approach on a set of established and complementary models using a dataset on agriculture at the level of US states. |
| Keywords: | Environmental economic inefficiency, Pollution-generating technologies, Technical and allocative efficiency measurement, Data envelopment analysis, US agriculture |
| Date: | 2019–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ems:eureri:116393&r=all |
| By: | Fredrik Heyman; Pehr-Johan Norbäck; Lars Persson |
| Abstract: | How can a country improve the productivity growth in its business sector and reach its growth potential? Sweden during the 1970–2010 period can serve as an example to help other countries understand how to efficiently reform a business sector. In the 1990s, Sweden implemented a reform package that ignited a successful reorganization of a business sector that had faltered for decades. To understand the economic forces behind this process, we first survey the industrial restructuring literature and then examine the reform package using Swedish matched plant-firm-worker data. The removal of barriers to growth for new and productive firms and increased rewards for investment in human capital were crucial to the success of Sweden’s reforms. We also discuss how the reform experience from a developed country such as Sweden can be useful for developing countries that are in the process of transforming their business sectors. We also discuss evidence from developing countries that have undergone similar micro-based business sector reform programs. Our findings suggest that policymakers have much to learn from country case studies and that the Swedish experience can be a valuable case study for developing countries that are attempting to promote growth by developing their business sectors. |
| Keywords: | regulations, allocative efficiency, productivity, job dynamics, matched employer-employee data, industrial structure and structural change |
| JEL: | D22 E23 J21 J23 K23 L11 L16 L51 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7627&r=all |
| By: | Oladeji, S.O.; Soladoye, O.O.; Omoare, A.M.; Sanusi, R.A.; Akerele, D.; Lawal, M.K.; Tolorunju, E.T.; Edewor, S.E.; Ogbe, A.O. |
| Keywords: | Crop Production/Industries |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:naae17:288489&r=all |
| By: | Achyuta Adhvaryu; Anant Nyshadham; Jorge A. Tamayo |
| Abstract: | Which managerial skills, traits, and practices matter most for productivity? How does the observability of these features affect how appropriately they are priced into wages? Combining two years of daily, line-level production data from a large Indian garment firm with rich survey data on line managers, we find that several key dimensions of managerial quality, like attention, autonomy, and control, are important for learning-by-doing as well as for overall productivity, but are not commensurately rewarded in pay. Counterfactual simulations of our structural model show large gains from screening potential hires via psychometric measurement and training to improve managerial practices. |
| JEL: | D24 L2 M11 M12 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25852&r=all |
| By: | Aderonmu, A.A.; Olagunju, F.I.; Aderibigbe, A.J.; Otekunrin, O.A. |
| Keywords: | Agribusiness |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:naae17:288484&r=all |
| By: | Juan A. Máñez Castillejo (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); M. Consuelo Mínguez Bosque (IVIE, Carrer de la Guàrdia Civil 22, 46020 València (Spain).); María E. Rochina-Barrachina (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Juan A. Sanchis Llopis (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).) |
| Abstract: | This work analyses the firms’ internationalization strategies of importing intermediates and exporting output, and the potential rewards of these activities in terms of total factor productivity (TFP), as a proxy for marginal costs, and markups. It further deepens into the study of the relationship between internationalization strategies and markups by disentangling whether it operates through affecting firms’ marginal costs and/or firms’ prices. The panel database employed in this paper is the Spanish Survey on Business Strategies (ESEE) for the period 2006- 2014. Results in the paper distinguish between SMEs and large firms and indicate that there is high persistence in the performance of these activities and in firms’ TFP and markups. In addition, the internationalization strategies are especially relevant for SMEs, as for this group we obtain rewards of the two activities in terms of both TFP and markups. Furthermore, we also find that these strategies allow SMEs to charge higher output prices. |
| Keywords: | Exports, imports of intermediates, total factor productivity, markups, output prices, manufacturing, firm-level data |
| JEL: | D24 F14 L11 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:1905&r=all |
| By: | Adedeji, I.A.; Tiku, N.E.; Waziri-Ugwu, P.R. |
| Keywords: | Crop Production/Industries |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:naae17:288492&r=all |
| By: | Lawal, A.F.; Adedeji, S.O.; Bwala, M.A.; Umaru, A.; Momoh, Joel |
| Keywords: | Resource /Energy Economics and Policy |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:naae17:288475&r=all |
| By: | Gona, A.; Mohammed, I.; Baba, K.M. |
| Keywords: | Livestock Production/Industries, Productivity Analysis |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:naae17:288343&r=all |
| By: | Terngu, Iorliam |
| Keywords: | Farm Management |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:naae17:288474&r=all |
| By: | Ajiboye, B.O.; Bamiro, O.M.; Adeyonu, A.G.; Adigun, G.T. |
| Keywords: | Productivity Analysis |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:naae17:288470&r=all |
| By: | Ehirim, N.C.; Azubogu, C.C.; Osuji, E.E. |
| Keywords: | Farm Management |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:naae17:288472&r=all |
| By: | Farnaz Pourzand; Ilan Noy; Yigit Saglam |
| Abstract: | We quantify the impacts of droughts in New Zealand on the profitability of dairy, and sheep and beef farms. Using a comprehensive administrative database of all businesses in New Zealand, we investigate the impact of droughts on farm revenue, profits, return on capital, business equity, debt to income ratio, and interest coverage ratio. Over the period we examine (2007-2016) about half of the districts experienced severe droughts, and almost 85% of districts were affected by more moderate droughts at least once. For dairy farms, there is a strong negative relationship between the occurrence of droughts two years earlier and farms’ revenue, profit and consequently their return on capital. More surprisingly, we found that current (same fiscal year) drought events have positive impacts on dairy farms’ revenue and profit; this effect is most likely attributable to drought-induced increases in the price of milk solids (New Zealand is the market maker in this global market). In general, dairy farmers ‘benefit’ more from drought events when compared to sheep/beef farms, whereas the latter sector has less impact on global prices. These findings are useful for shaping climate-change adaptation as there is a clear variation in the future climate-change projections of drought intensities and frequencies for different regions in New Zealand. |
| Keywords: | drought, profitability, dairy, sheep/beef farming, New Zealand |
| JEL: | Q12 Q54 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7633&r=all |
| By: | Balogum, O.L; Ogunsina, I.J.; Ayo-Bello, T.A.; Afodu, O.J.; Osuji, E.E. |
| Keywords: | Productivity Analysis |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:naae17:288488&r=all |
| By: | Oyekale, T.O,; Azeez, S.M.; Sanusi, R.A.; Elemo, K.A. |
| Keywords: | Productivity Analysis |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:naae17:288478&r=all |