Profit-oriented productivity change

This study develops an applicable profit-oriented productivity indicator when producers pursue profit maximization and can recognize input and output prices. We define the indicator, inspired by the Luenberger indicator and the Nerlovian efficiency measurement, in terms of both quantity distance functions and profit. Hence, the study׳s first stage decomposes the profit-oriented productivity change into two terms: profit efficiency change and profit technology change. Second, we decompose profit efficiency change into the changes in technical efficiency and allocative efficiency. Finally, profit technology change is separated into two components for capturing the shifts of technology and relative output/input prices. These decompositions provide a more complete picture of the sources of productivity change. We illustrate them with a sample of Taiwanese banks and compute the results using the models of directional distance functions.     

The measurement of revenue inefficiency over time: An additive perspective

In this paper, we measure and decompose revenue inefficiency over time while accounting for all sources of technical inefficiencies. Our proposed decomposition exploits the dual relationship between the weighted additive distance function and revenue inefficiency in Aparicio et al. [1]. With the aid of the Luenberger indicator, we decompose this indicator into productivity change, and overall allocative change components. The importance of such decomposition is that it provides a complete picture of the sources of productivity change, thus obtaining a slack free allocative component. Finally, the model is applied to the French wine sector to illustrate its practicality: we track how revenue inefficiency evolves in French wine regions over the 2004–2013 period, before and after the implementation of Common Market Organization policies in Europe in 2008.     

Nerlovian profit inefficiency in non-fully-competitive settings: Definition and decomposition

Nerlovian profit inefficiency applies directional distance functions, which allow specification of the direction in which the decision-making units will be evaluated. Through some degree of adjustable prices, the source of Nerlovian profit inefficiency can further be decomposed into technical inefficiency, price inefficiency and allocative inefficiency. The proposed indicator is demonstrated by an empirical application to a sample of Taiwanese banks in 2011. The example explains how the empirical usefulness of the proposed approach is able to properly measure Nerlovian profit inefficiency and its components, and shows how the price adjustment affects the banks' performance in Taiwan.     

A Nerlovian cost inefficiency two-stage DEA model for modeling banks’ production process: Evidence from the Turkish banking system

By developing a two-stage model the paper examines the cost inefficiency levels of Turkish banks during the period from 2007 to 2016. Using the notion of Koopmans input efficiency we deconstruct the estimated Nerlovian cost inefficiency to the sum of slack-based allocative and technical inefficiency levels. Alongside the traditional inputs, intermediates and outputs used to model banks’ performance measure we additionally use their labor education quality factor as a non-discretionary input. This allows us to model how human capital factors affect a bank's revenue generation stage. Our findings suggest that cost inefficiency levels are driven mainly by a bank's ability to control its allocative inefficiency levels. The empirical evidence also shows that foreign banks perform better, suggesting that bank ownership structures matter when measuring cost performance. Finally, it is evident that the Global Financial Crisis (GFC) had a negative effect on banks’ ability to minimize their cost inefficiency levels. However, the post-crisis findings demonstrate that Turkish banks have started to recover from its negative effects, mainly by improving their allocative performance.     

Risk-based decompositions of the meta profit efficiency of Taiwanese and Chinese banks

This study measures the profit efficiencies of Taiwanese and Chinese banks with the assumption that both types could operate under the metafrontier. To consider the risk consideration of banks, we include equity capital as a quasi-fixed input and develop the risk-based measures of the meta Nerlovian profit efficiency. We further decompose meta profit efficiency and gap into technology and allocative efficiencies and gaps. We use 34 Taiwanese banks and 70 Chinese banks in 2011 to empirically measure profit efficiency and its decompositions. Empirical results show that the Chinese state-owned banks perform the best in meta profit efficiency, followed by Chinese joint-equity banks and Taiwanese state-owned banks. These three types of banks are performing better than the other types of banks in Taiwan and China. We also find that Taiwanese private banks perform better in profit and technical efficiencies versus Chinese city banks.     

Non-oriented slack-based decompositions of profit change with an application to Taiwanese banking

A change in profit can originate from the output side and the input side. In the spirit of work by Tone [1] and follows Grifell-Tatjé and Lovell's [2], we propose a non-oriented slacks-based measure (SBM) model to decompose the change in the operating profit into various meaningful components: quantity effect and a price effect. The quantity effect can be decomposed into a productivity effect and an activity effect. The productivity effect is further decomposed into a technical effect and an operating efficiency effect. Both of them include an output side, which will result in a change in revenue and an input side which will result in a change in cost. The activity effect can be decomposed into a product mix effect, a resource mix effect and a scale effect. We illustrate our decompositions to the Taiwanese banking sector during the period 1994-2002 using the average of the base and current prices to evaluate these contributions. We find ignoring input side effects on the decomposition of profit changes would cause misleading results in managerial issues.     

An expanded decomposition of the Luenberger productivity indicator with an application to the Chinese healthcare sector

The objective of this research is to combine productivity analysis at the “firm-level” and the “industry-level” so that a novel, fuller decomposition of the sources of productivity change can be undertaken. Productivity change is decomposed into technological progress, technical, mix, and scale efficiency effects. Specifically, our decomposition allows us to capture changes in productivity due to the reallocation of inputs or outputs across productive units. In practice, such reallocation might take place across plants operated by the same firm, across regions within a country, or via mergers and acquisitions. The new decomposition of the aggregate Luenberger productivity indicator is illustrated using data at both the provincial and regional levels for China's healthcare sector over the period 2009–2014. Our results indicate that the growth of the aggregate Luenberger productivity indicator varied across both time and regions. We find that China's regional productivity growth in healthcare was primarily driven by technological progress, while the contributions of the other components of productivity change were smaller and more varied across regions.     

Multi-output profit efficiency and directional distance functions

We extend a recently developed DEA methodology for cost efficiency analysis towards profit efficiency settings. This establishes a novel DEA toolkit for profit efficiency assessments in situations with multiple inputs and multiple outputs. A distinguishing feature of our methodology is that it assumes output-specific production technologies. In addition, the methodology accounts for the use of joint inputs, and explicitly includes information on the allocation of inputs to individual outputs. We also establish a dual relationship between our multi-output profit inefficiency measure and a technical inefficiency measure that takes the form of a multi-output directional distance function. Finally, we demonstrate the empirical usefulness of our methodology by an empirical application to a large service company.     

赔付率约束下的中国保险公司效率与全要素生产率研究

运用SBM(slack-based measure)方向性距离函数分别计算了赔付率约束下的2006-2016年中国境内的财产保险公司、人身保险公司的经营无效率值,并对无效率值的来源进行分解。在此基础上运用Luenberger生产率指数计算出全要素生产率及其分解项,对中资、外资保险公司的经营效率、全要素生产率及其分解项进行了对比分析。结果表明:财险业的中资大型公司经营效率最高,人身险业的中资公司经营效率明显高于外资公司;投资收益无效率是造成中小型人身险公司和中小型财产险公司无效率的最主要原因;财险业大型公司的全要素生产率低于中小型公司,而人身险业外资公司的全要素生产率明显高于中资公司。     

效用型Malmquist指数方法及火电类上市公司实证分析

文章定义了一种基于距离函数的效用型Malmquist指数,并将其分解为技术效率、技术进步、配置效率和系统外生效应等多个指标,该指数采用"期望效用最大"而非"期望产出最大"的优化原则寻找最优决策单元。该指数适用于寡头垄断行业或需要综合考虑经济效益、社会影响的社会公共品行业。最后以2006到2007年中国火电类上市公司进行实证分析,证明与投入型Malmquist指数相比,效用型Malmquist指数评价结果更为客观,经济解释更加明确。     

基于前沿分析方法的中国工业部门 广义碳生产率指数测算及变化分解

碳生产率能将低碳经济的两大目标融为一体,工业部门作为能源密集型部门,是二氧化碳排放的主体,其碳生产率的变化深刻影响着中国整体碳生产率的格局。目前,大部分学者都用GDP与二氧化碳排放量的比值作为衡量碳生产率的指标,然而二氧化碳排放空间作为一种投入要素,其产出除了经济绩效外还包括环境、就业等综合绩效。本文基于广义碳生产率的概念,通过对前沿分析方法的比较,选择基于方向性距离函数的DEA方法,测算了中国工业部门各细分行业从2004-2009年的广义碳生产率指数,并对其变化进行了分解。结果表明:(1)中国工业部门广义碳生产率指数整体小于1,说明广义碳生产率水平整体上存在下降的趋势;(2)引致工业部门广义碳生产率指数整体小于1的主要原因是技术效率和规模效率低下。     

Graph productivity change measure using the least distance to the pareto-efficient frontier in data envelopment analysis

This paper proposes a new method to measure productivity change of decision making units in the full input-output space. The new approach is based on the calculation of the least distance to the Pareto-efficient frontier and hence provides the closest targets for evaluated decision making units to reach the strongly efficient frontier with least effort. Another advantage of the new methodology is that it always leads to feasible solutions. The productivity change in the new approach is operationalized as a Luenberger-type indicator in the Data Envelopment Analysis framework and it is decomposed into efficiency change and technical change. The paper empirically illustrates the new method using recent data on the Spanish quality wine sector.     

Efficiency evaluation of banks in China: A dynamic two-stage slacks-based measure approach

Operational processes of banks in China can be divided into productivity and profitability stages. Within this, non-performing loans can be treated as a carry-over variable, an undesirable output of the profitability stage in the previous period but an input to the profitability stage in the current period. Using this framework, this paper proposes a dynamic two-stage slacks-based measure model to evaluate the efficiencies of Chinese banks. Based on the proposed model, the measures of stage, period and period stage efficiencies are defined. The proposed approach is applied to evaluate the operational efficiency of banks in China during 2008–2012. Key findings are that banks in China show both technical and scale inefficiency during 2008–2012, which results from the inefficiencies of both the productivity stage and profitability stage; city-owned commercial banks are more overall technically efficient than state-owned commercial banks and joint-stock commercial banks although state-owned commercial banks show best practice for pure technical efficiency, and city-owned commercial banks perform better than joint-stock commercial banks for pure technical efficiency.     

Effect of Quality Management Systems and Total Quality Management on Productivity Before and After: Empirical Evidence from the Indian Auto Component Industry

We study the linkages between firm‐level quality initiatives such as quality management systems (QMS) and total quality management (TQM) and output productivity in the Indian auto component industry. We use externally validated quality certification and quality awards as proxies for QMS and TQM, respectively, as it is difficult to directly measure the QMS and TQM efforts of firms. We use an unbalanced panel of 220 firms and a balanced panel of 73 firms from the Indian auto component industry over the period 1993–2006 to study these links. Both parametric as well as non‐parametric approaches are used, as appropriate, to measure the rate of change in productivity and the impact of quality initiatives on productivity change during this period. We determine the proportion of productivity resulting from technical change and relative efficiency change, thus providing insights into the structure of productivity improvements. We find that TQM efforts resulted in a high rate of productivity change (11%) in the award‐winning firms after the award. On the other hand, pre‐certification productivity change due to QMS was 5% and post‐certification change was 3.6%. In the periods prior to certification, productivity change was driven mainly by technical change; whereas the source of productivity change after certification is mixed. However, prior to awards, productivity change was driven mainly by relative efficiency change, whereas post‐award productivity change was due to technical change. The results suggest that management focus on attaining certification did generate conceptual learning (linked to technical change) during the period leading to certification, but these effects were not significant after certification. The results also suggest that the TQM programs generated significant productivity gains in the long run, although setting the associated systems in place did not result in significant productivity change prior to winning awards. Thus, the study provides direct but nuanced evidence linking quality certification as well as the adoption of TQM programs to the associated conceptual and operational learning processes and their impact on the change in productivity.     

Regional Labour Market Matching Functions and Efficiency Analysis

Abstract. Stochastic production frontiers are used for estimating regional matching functions where unemployment outflow is ‘produced’ by the unemployed and vacancies. The frontier is estimated using regional panel data from Finland from 1988 to 1997 and the Battese and Coelli frontier model, where the explanatory factors are included in the inefficiency term. The stochastic frontier matching function has constant returns, whereas in OLS estimation with fixed effects the returns are slightly increasing. Unemployment and vacancies in neighbouring regions have a spillover effect on efficiency. Excess job reallocation in a region deteriorates matching efficiency. The decomposition of total factor productivity change in matching to efficiency change and change in matching technology is also investigated by interpreting the matching frontier as a distance function and using Malmquist indexes. There is a downward trend in the technology, but short‐term variations are dominated by cyclical changes in efficiency.     

Opening the black box of efficiency analysis: An illustration with UAE banks

Standard data envelopment analysis (DEA) does not provide adequate detail to identify the specific sources of inefficiency embedded in interacting divisions of an organization. On the other hand, network DEA gives access to this underlying diagnostic information that would otherwise remain undiscovered. As a first study of its kind, the paper illustrates an application of non-oriented network slacks-based measure using simulated profit center data that, in turn, rely on actual aggregate data on domestic commercial banks in the United Arab Emirates (UAE). The study also contributes to a perennial research problem, namely, inability of the outside researcher to access internal data for developing or testing new methods. In addition to these contributions to the Operations Research literature, focusing on UAE contributes to banking literature because this rapidly expanding part of the Middle East seldom appears in frontier efficiency literature.     

Statistical precision of DEA and Malmquist indices: A bootstrap application to Norwegian grain producers

Previous applications of data envelopment analysis (DEA) and its subsequent Malmquist indices to efficiency and productivity measurements have been criticised for not providing statistical inferences regarding the significance of observed results. In this paper, DEA and a Malmquist index are combined with a bootstrap method in order to provide succinct statistical inferences that determine the performance of grain producers in Eastern Norway. The data cover the period between 1987 and 1997. Results reveal: (i) a significant degree of inefficiency (approximately 11%) and an average productivity progress of 38% over the period considered; (ii) the formidable productivity progress observed is primarily explained by technical efficiency changes that enabled producers to catch up with front runners; and (iii) environmental factors, such as weather conditions, impact both efficiency and productivity. Finally, the analysis reveals that using bootstrapping to make statistical inferences suggests that researchers should be careful in making performance comparisons based on conventional DEA methods, as any discovered differences may not be significant.     

Efficiency measures of the Chinese commercial banking system using an additive two-stage DEA

Measuring and improving the efficiency of the Chinese commercial banking system has recently attracted increasing interest. Few studies, however, have adopted the two-stage network DEA to explore this issue in the Chinese context. Because the entire operational process of the banking system could be divided into two sub-processes (deposit producing and profit earning), the evaluation of the sub-process efficiencies could be used to assist in identifying the sources of the inefficiency of the entire banking system. In this study, we utilize the network DEA approach to disaggregate, evaluate and test the efficiencies of 16 major Chinese commercial banks during the third round of the Chinese banking reform period (2003–2011) with the variable returns to scale setting and the consideration of undesirable/bad output. The main findings of this study are as follows: (i) the two-stage DEA model is more effective than the conventional black box DEA model in identifying the inefficiency of banking system, and the inefficiency of the Chinese banking system primarily results from the inefficiency of its deposit producing sub-process; (ii) the overall efficiency of the Chinese banking system improves over the study period because of the reform; (iii) the state-owned commercial banks (SOBs) appear to be more overall efficient than the joint-stock commercial banks (JSBs) only in the pre-reform period, and the efficiency difference between the SOBs and the JSBs is reduced over the post-reform period; (iv) the disposal of non-performing loans (NPLs) from the Chinese banking system in general explains its efficiency improvement, and the joint-equity reform of the SOBs specifically increases their efficiencies.     

Changes in productivity of Spanish university libraries

This paper analyzes productivity growth, technical progress, and efficiency change in a sample of 34 Spanish university libraries between 2003 and 2007. Data envelopment analysis and a Malmquist index are combined with a bootstrap method to provide statistical inference estimators of individual productivity, technical progress, pure efficiency, and scale efficiency scores. To calculate productivity, a three-stage service model has been developed, examining productivity changes in the relationships between the libraries' basic inputs, intermediate outputs, and final outputs. The results indicate a growth in the productivity of the libraries (relationship between basic inputs and intermediate outputs) and in the productivity of the service (relationship between basic inputs and final outputs). The growth in productivity in both relationships is due to technical progress. If the variable representing the use of electronic information resources is removed from the final output, the result is a significant reduction in productivity.     

A slack-based measure of efficiency in context-dependent data envelopment analysis

Data envelopment analysis (DEA) has been proven as an excellent data-oriented performance evaluation method when multiple inputs and outputs are present in a set of peer decision-making units (DMUs). In the DEA literature, a context-dependent DEA is developed to provide finer evaluation results by examining the efficiency of DMUs in specific performance levels based upon radial DEA efficiency scores. In DEA, non-zero input and output slacks are very likely to present after the radial efficiency score improvement. Often, these non-zero slack values represent a substantial amount of inefficiency. Therefore, in order to fully measure the inefficiency in DMU's performance, it is very important to also consider the inefficiency represented by the non-zero slacks in the context-dependent DEA. This study proposes a slack-based context-dependent DEA which allows a full evaluation of inefficiency in a DMUs performance. By using slack-based efficiency measure, we obtain different frontier levels and more appropriate performance benchmarks for inefficient DMUs.