Non-radial profit performance: An application to Taiwanese banks |
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| Institution: | 1. Department of International Business, Lunghwa University of Science and Technology, No. 300, Section 1, Wanshou Road, Guishan District, Taoyuan City 33306, Taiwan, ROC;2. Department of Economics, Soochow University, No. 56, Section 1, Kueiyang Street, Taipei 10048, Taiwan, ROC;3. Department of Transportation Science, National Taiwan Ocean University, No. 2, Pei-Ning Road, Keelung 20224, Taiwan, ROC;4. Department of Marketing and Logistics Management, Taipei City University of Science and Technology, No. 2, Xueyuan Road, Peitou, Taipei 112, Taiwan, ROC;1. Faculty of Science and Technology, Seikei University, Musashino-shi, Tokyo 180-8633, Japan;2. Institute of Physics, University of Tokyo, Komaba, Meguro-ku, Tokyo 153-8902, Japan |
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| Abstract: | This research modifies the directional Russell measure (DRM) of Fukuyama and Weber (2009) 1] to decompose the Nerlovian profit efficiency in Chambers et al. (1998) 2] so as to obtain a generalized measure that completely excludes technical inefficiency from allocative inefficiency. Based on such a decomposition, we further develop a new slack-based and profit-oriented productivity indicator, combining the Nerlovian profit measure with the conventional Luenberger productivity indicator (LPI), in order to provide a full picture of the sources of productivity change. Productivity change, based on the profit boundary, is decomposed into four components: the change in technical efficiency; the change in allocative efficiency; the shift of technology; and the price effect from outputs and inputs. This decomposition provides a more complete picture of the sources of productivity change. The above indicator is used herein to measure the productivity change of Taiwanese banks in terms of profit. |
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| Keywords: | Data envelopment analysis (DEA) Slack-based measure Nerlovian Profit Productivity change |
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