|
on Efficiency and Productivity |
|
Issue of 2019‒08‒12
fifteen papers chosen by |
| By: | Huljak, Ivan; Martin, Reiner; Moccero, Diego |
| Abstract: | We use an industrial organisation approach to quantify the size of Total Factor Productivity Growth (TFPG) for euro area banks after the crisis and decompose it into its main driving factors. In addition, we disentangle permanent and time-varying inefficiency in the banking sector. This is important because lack of distinction may lead to biased estimates of inefficiency and because the set of policies needed in both cases is different. We focus on 17 euro area countries over the period 2006 to 2017. We find that cost efficiency in the euro area banking sector amounted to around 84% on average over the 2006 to 2017 period. In addition, we observe that Total Factor Productivity growth for the median euro area bank decreased from around 2% in 2007 to around 1% in 2017, with technological progress being the largest contributor, followed by technical efficiency. Given the need to boost productivity and enhance profitability in the euro area banking sector, these findings suggests that bank’s efforts in areas such as rationalisation of branches, digitalisation of business processes and possibly mergers and acquisitions should be intensified. JEL Classification: C23, D24, G21 |
| Keywords: | banking sector, bank productivity, cost-efficiency frontier, euro area, financial stability, panel data, permanent inefficiency, time-varying inefficiency, total factor productivity |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20192305&r=all |
| By: | Plastina, Alejandro; Ortiz-Bobea, Ariel; Lence, Sergio H. |
| Keywords: | Productivity Analysis |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:291203&r=all |
| By: | Loren Brandt; Feitao Jiang; Yao Luo; Yingjun Su |
| Abstract: | We study productivity differences in vertically-integrated Chinese steel facilities using a unique data set that provides equipment-level information on material inputs and output in physical units and equipment size for each of the three main stages in the steel value chain, i.e., sintering, pig-iron making, and steel making. We find that private vertically-integrated facilities are more productive than provincial state-owned (SOEs) facilities, followed by central SOEs. This ranking lines up with our productivity estimates in the two downstream production stages, but central SOEs outperform in sintering, most likely because of their superior access to higher quality raw materials. The productivity differential favoring private facilities declines with their size, turning negative for facilities larger than the median. These patterns are linked with equipment-level TFP in private firms as size expands, and the internal configuration of vertically-integrated facilities, which reflect the greater constraints facing private firms. Increasing returns to scale at the stage and facility-level partially offset these costs and rationalize firms' choice on larger vertically-integrated facilities. |
| Keywords: | Total Factor Productivity, Vertically-Integrated, Steel, SOEs, Private, China |
| JEL: | D24 L11 L23 L61 |
| Date: | 2019–07–31 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-641&r=all |
| By: | Carlo Altomonte; Domenico Favoino; Tommaso Sonno |
| Abstract: | We incorporate heterogeneous financial frictions in a setting of monopolistically competitive firms with endogenous markups. Before producing, firms must pledge collateral to obtain a bank loan, needed to cover part of production costs. Firms differ both in productivity and in their cost of raising collateral. Firm-specic financial frictions, together with productivity, therefore figure in the equilibrium expressions of prices and markups. We validate our theoretical results on a representative sample of European manufacturing firms surveyed during the financial crisis. Guided by our model we retrieve from balance-sheet data firm-specic measures of access to finance, total factor productivity and markups, and then use these variables to estimate our equilibrium equations structurally. Consistent with our model, we show how heterogeneity in access to finance explains part of the dispersion of prices and markups, even after controlling for firms' productivity and size. In the aggregate industry equilibrium, the amount of collateral required by banks significantly affects the cost pass-through to prices. |
| Keywords: | Financial frictions, heterogeneous firms, markups |
| JEL: | D24 E22 F36 G20 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:baf:cbafwp:cbafwp18100&r=all |
| By: | Rolf Färe (Department of Economics, Oregon State University and Department of Agricultural and Resource Economics, University of Maryland, USA); Hideyuki Mizobuchi (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia); Valentin Zelenyuk (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia) |
| Abstract: | We analyse two popular notions in production theory: the notion of Hicks neutral technical change and the notion of homothetic technology. Both of these notions are characterized by the radial expansions or contractions of the relevant isoquants, yet in different ways. In the case of multiple-input and multiple-output, an isoquant is characterized by either the input or output combinations. Thus, for each of these notions, there are two types of conditions: one is based on the input isoquants and the other is based on the output isoquants. We show that for each notion, these two conditions are equivalent under the ð ›¼-returns to scale technology. From this result, we also derive several implications for the properties of well-known productivity indexes, such as the Malmquist productivity index and the Hicks-Moorsteen productivity index. |
| Keywords: | homotheticity, input homotheticity, output homotheticity, inverse homotheticity, ð ›¼-returns to scale technology, Malmquist productivity index, Hicks-Moorsteen productivity index |
| JEL: | C43 D24 L11 O33 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uqcepa:139&r=all |
| By: | Manh D. Pham (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia); Lèopold Simar (Institut de Statistique, Biostatistique et Sciences Actuarielles, Universite Catholique de Louvain, B1348 Louvain-la-Neuve, Belgium); Valentin Zelenyuk (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia) |
| Abstract: | The Malmquist Productivity Index (MPI) has gained popularity amongst studies on dynamic change of productivity of decision making units (DMUs). In practice, this index is frequently reported at aggregate levels (e.g., public and private rms) in the form of simple equally-weighted arithmetic or geometric means of individual MPIs. A number of studies have emphasized that it is necessary to account for the relative importance of individual DMUs in the aggregations of indices in general and of MPI in particular. While more suitable aggregations of MPIs have been introduced in the literature, their statistical properties have not been revealed yet, preventing applied researchers from making essential statistical inferences such as con dence intervals and hypothesis testing. In this paper, we will ll this gap by developing a full asymptotic theory for an appealing aggregation of MPIs. On the basis of this, some meaningful statistical inferences are proposed and their nite-sample performances are veri ed via extensive Monte Carlo experiments. |
| Keywords: | aggregation, asymptotics, DEA, hypothesis test, inference, Malmquist index, productivity |
| JEL: | C14 C44 C51 D24 M11 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uqcepa:138&r=all |
| By: | Pedro Bento; Diego Restuccia |
| Abstract: | We construct a new dataset for the average employment size of establishments across sectors and countries from hundreds of sources. Establishments are larger in manufacturing than in services, and in each sector they are larger in richer countries. The cross-country income elasticity of establishment size is remarkably similar across sectors, about 0.3. We discuss these facts in light of several prominent theories of development such as entry costs and misallocation. We then quantify the sectoral and aggregate impact of entry costs and misallocation in an otherwise standard two-sector model with endogenous firm entry, firm-level productivity, and sectoral employment shares. We find that observed measures of misallocation account for the entire range of establishment-size differences across sectors and countries and almost 50 percent of the difference in non-agricultural GDP per capita between rich and poor countries. |
| Keywords: | establishment size, manufacturing, services, distortions, misallocation, productivity. |
| JEL: | O1 O4 O5 E02 E1 |
| Date: | 2019–08–05 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-642&r=all |
| By: | Yakubu, Ibrahim Nandom |
| Abstract: | Relying on more recent data spanning 2007-2016, this paper investigates the impact of working capital management (WCM) on dividend policy of listed non-financial firms in Ghana. Specifically, the study assesses the effect of cash conversion cycle (CCC), days inventory outstanding (DIO), profitability, and firm growth on dividend policy. Employing the ordinary least squares (OLS) analytical technique, the findings reported that working capital management (in terms of cash conversion cycle and days inventory outstanding) and dividend policy are positively related, with DIO having a significant effect on dividend policy. The results also established a positive association between the control variables (profitability and firm growth) and dividend policy albeit insignificantly. Based on the findings, the study concludes that working capital management in terms of days inventory outstanding (DIO) is a critical factor influencing firms’ dividend policy decisions. The study extends the inconclusive empirical evidence on the determinants of dividend policy and fills the lacuna in existing literature by focusing on how working capital management practices influence dividend policy of firms in Ghana. The findings are also useful to the board of directors of non-financial firms in deciding an appropriate dividend policy, and to the shareholders in making investment decisions. |
| Keywords: | Dividend policy; working capital; profitability; firms; Ghana |
| JEL: | M00 M1 M21 M41 |
| Date: | 2019–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:95318&r=all |
| By: | Fariñas, José C.; Martín-Marcos, Ana; Velázquez, Francisco J. |
| Abstract: | This paper offers an empirical assessment of the scope elasticity of multinational activity at the world level. By scope elasticity, we refer to the relationship between the productivity of the parent firm and the probability of operating in a given foreign market through subsidiaries with the same main activity. Elasticities are estimated for a baseline cross-section of 36 countries that represent 74% of total outward FDI investment at the world level. At the aggregate level, results indicate quite consistently, through various estimation methods, that a 10% increase in productivity of the parent firm increases the probability in a range between 0.8-1.5%. Elasticities for manufacturing more than double the elasticities for the service sector. The paper also explores the heterogeneity of scope elasticities across home countries and sectors. This heterogeneity is related to differences across bilateral home-host country characteristics such as the size of the potential host market, bilateral distance, average tariff, institutional quality of host countries and other factors. The signs attached to these factors are in general consistent with the predictions of models of firm heterogeneity and FDI activity. Once heterogeneity and survey biases are controlled, scope elasticities reduce somewhat. |
| Keywords: | Foreign Direct Investment, Scope Elasticity of Multinational Corporations, Productivity. |
| JEL: | F23 L25 M16 |
| Date: | 2019–05–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94990&r=all |
| By: | Kusunose, Yoko; Theriault, Veronique; Alia, Didier Y. |
| Keywords: | International Development |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:291047&r=all |
| By: | Yuko Nakano; Eustadius F.Magezi |
| Abstract: | This paper examines the impact of microcredit on the adoption of technology and productivity of rice cultivation in Tanzania. Collaboratively with BRAC, a globally-known microfinance institution, we offered microcredit specifically designed for agriculture to randomly selected farmers. We estimate the intention-to-treat effect (ITT) as well as the local average treatment effect (LATE) of microcredit, by using the eligibility to the program as an instrumental variable (IV). Overall, we find statistically weak or even null evidence that the BRAC program increases the use of chemical fertilizer. Also, credit use does not result in an increase in paddy yield, profit from rice cultivation, or household income for borrowers. Our results from sub-sample analyses suggest that credit does not increase the fertilizer use by those who have better access to irrigation water as they have already applied the amount of fertilizer near to the recommended level. On the other hand, credit increases the fertilizer use by those who have limited access to irrigation water and have previously used little fertilizer. However, possibly due to the poor yield response to fertilizer, the increase in chemical fertilizer use does not result in higher yield for them. We also observed similar phenomenon for the comparison between trained and non-trained borrowers before the intervention. |
| Keywords: | Microcredit, Technology Adoption, Agriculture, Tanzania, Africa |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:jic:wpaper:193&r=all |
| By: | Alves, Paulo Nocera; Bartholomeu, Daniela B.; Cruz, José C.; Caixeta-Filho, José V. |
| Keywords: | Productivity Analysis |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:291196&r=all |
| By: | Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa) |
| Abstract: | There is a growing body of evidence that interest rate spreads in Africa are higher for big banks compared to small banks. One concern is that big banks might be using their market power to charge higher lending rates as they become larger, more efficient, and unchallenged. In contrast, several studies found that when bank size increases beyond certain thresholds, diseconomies of scale are introduced that lead to inefficiency. In that case, we also would expect to see widened interest margins. This study examines the connection between bank size and efficiency to understand whether that relationship is influenced by exploitation of market power or economies of scale. Using a panel of 162 African banks for 2001–2011, we analyzed the empirical data using instrumental variables and fixed effects regressions, with overlapping and non-overlapping thresholds for bank size. We found two key results. First, bank size increases bank interest rate margins with an inverted U-shaped nexus. Second, market power and economies of scale do not increase or decrease the interest rate margins significantly. The main policy implication is that interest rate margins cannot be elucidated by either market power or economies of scale. Other implications are discussed. |
| Keywords: | Sub-Saharan Africa; banks; lending rates; efficiency; Quiet Life Hypothesis; competition |
| JEL: | E42 E52 E58 G21 G28 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:abh:wpaper:18/056&r=all |
| By: | Nybom, Jozefine; Hunter, Erik; Micheels, Eric T.; Melin, Martin |
| Keywords: | Agribusiness |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:290683&r=all |
| By: | Randolph Luca Bruno; Elodie Douarin; Julia Korosteleva; Slavo Radosevic |
| Abstract: | The paper explores the determinants of productivity gap within the European Union in four industrial manufacturing sectors (computers, chemicals, basic metals and food) of strong macroeconomic significance and varied 'Research and Development' (R&D) intensity. Our analysis reveals that some of the most important factors determining productivity gap across the EU are related to technology gap variables - R&D intensity and R&D embedded in purchased equipment and machinery - and how they interact. While the signs for both R&D and embedded R&D are as expected and our results emphasise the relevance of technology for closing the productivity gap, this is not the case with the interaction between these two variables. The estimates for the interaction terms are indeed very significant and consistently negative in three out of four sectors. This negative relationship suggests that there is no complementarity between these two modes of technology acquisition - R&D and embedded R&D investments - which are however each separately crucial for catching up. In policy terms, this situation suggests that there is a lack of coordination between R&D policy and technology transfer (FDI, trade and industrial policy). Given that, our results also show a widening productivity gap between the countries of the EU periphery (South and East) and the rest of the sample. |
| Keywords: | productivity; technology gap; multilevel analysis; European Union. |
| Date: | 2019–08–09 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2019/25&r=all |