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1 – 10 of 171Zhichao Wang and Valentin Zelenyuk
Estimation of (in)efficiency became a popular practice that witnessed applications in virtually any sector of the economy over the last few decades. Many different models were…
Abstract
Estimation of (in)efficiency became a popular practice that witnessed applications in virtually any sector of the economy over the last few decades. Many different models were deployed for such endeavors, with Stochastic Frontier Analysis (SFA) models dominating the econometric literature. Among the most popular variants of SFA are Aigner, Lovell, and Schmidt (1977), which launched the literature, and Kumbhakar, Ghosh, and McGuckin (1991), which pioneered the branch taking account of the (in)efficiency term via the so-called environmental variables or determinants of inefficiency. Focusing on these two prominent approaches in SFA, the goal of this chapter is to try to understand the production inefficiency of public hospitals in Queensland. While doing so, a recognized yet often overlooked phenomenon emerges where possible dramatic differences (and consequently very different policy implications) can be derived from different models, even within one paradigm of SFA models. This emphasizes the importance of exploring many alternative models, and scrutinizing their assumptions, before drawing policy implications, especially when such implications may substantially affect people’s lives, as is the case in the hospital sector.
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Tra Thanh Ngo, Minh Quang Le and Thanh Phu Ngo
The purpose of this paper is to incorporate risk in technical efficiency of ASEAN banks in a panel data framework for the period 2000 to 2015.
Abstract
Purpose
The purpose of this paper is to incorporate risk in technical efficiency of ASEAN banks in a panel data framework for the period 2000 to 2015.
Design/methodology/approach
The directional distance function and semi-parametric framework are employed to estimate efficiency scores for two scenarios, one with only good outputs and the other with a combination of good and bad outputs.
Findings
The findings show there is no evidence of technological progress for banks in ASEAN and concerns about the outperformance of Vietnam’s banks. In addition, performance of Vietnam’s banks tends to be distorted by low level of loan loss reserves.
Practical implications
To reflect the true performance and shorten the period of removing bad assets, the State Bank of Vietnam can request banks in Vietnam to book more loan loss reserves.
Originality/value
By examining such a new approach, this study makes an early attempt to incorporate credit risk into the banking efficiency in ASEAN region.
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The purpose of this paper is to estimate technical efficiency obtained from both data envelopment analysis (DEA) and stochastic frontier approaches using household survey data for…
Abstract
Purpose
The purpose of this paper is to estimate technical efficiency obtained from both data envelopment analysis (DEA) and stochastic frontier approaches using household survey data for rice farming households in Vietnam.
Design/methodology/approach
A bootstrap method is used to provide statistical precision of the DEA estimator. Technical efficiency is modeled as a function of household and production factors.
Findings
The results from the deterministic, semi‐parametric and parametric approaches indicate that among other things, technical efficiency is significantly influenced by primary education and regional factors. In addition, scale efficiency analysis shows that many farms in Vietnam are operating with less than optimal scale of operation.
Originality/value
The study is among the first that employ a bootstrap method and compare estimates from both Data Envelopment Analysis (DEA) and stochastic frontier approaches.
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This chapter provides a survey of alternative methodologies for measuring and comparing productivity and efficiency of airlines, and reviews representative empirical studies. The…
Abstract
This chapter provides a survey of alternative methodologies for measuring and comparing productivity and efficiency of airlines, and reviews representative empirical studies. The survey shows the apparent shift from index procedures and traditional OLS estimation of production and cost functions to stochastic frontier methods and Data Envelopment Analysis (DEA) methods over the past three decades. Most of the airline productivity and efficiency studies over the last decade adopt some variant of DEA methods. Researchers in the 1980s and 1990s were mostly interested in the effects of deregulation and liberalization on airline productivity and efficiency as well as the effects of ownership and governance structure. Since the 2000s, however, studies tend to focus on how business models and management strategies affect the performance of airlines. Environmental efficiency now becomes an important area of airline productivity and efficiency studies, focusing on CO2 emission as a negative or undesirable output. Despite the fact that quality of service is an important aspect of airline business, limited attempts have been made to incorporate quality of service in productivity and efficiency analysis.
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Trang Dang, David Leatham, Bruce A. McCarl and Ximing Wu
The purpose of this paper is to develop information on the relative efficiency of Farm Credit System (FCS) lenders. Also the evolution of relative efficiency is examined as…
Abstract
Purpose
The purpose of this paper is to develop information on the relative efficiency of Farm Credit System (FCS) lenders. Also the evolution of relative efficiency is examined as influenced by the biofuel boom, the financial crisis, and farm income increases. The paper aims to discuss these issues.
Design/methodology/approach
A stochastic frontier production function is used to estimate technical efficiency of FCS banks and associations.
Findings
A significant difference is found in efficiency between large and small associations and banks. Larger asset bases and management compensation are found to be positively associated with efficiency. Banks are found to have higher technical efficiency than associations (66-46 percent). Association efficiency is found to be increasing indicating likely effects of recent consolidation. The financial crisis was not found to have a significant effect with the bioenergy and farm income booms being likely countervailing forces.
Research limitations/implications
Further work is needed on the impact of the biofuel boom, increases in farm income, and new regulations.
Practical implications
The study provides information and indications of strategies for FCS management including additional consolidation.
Originality/value
This does an updated assessment of FCS efficiency taking into account changes in consolidation, lending practices, and economic conditions. Implications are developed for management actions such as more consolidation. The study also uses a more advanced methodology compared to older studies.
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While there exist many surveys on the use stochastic frontier analysis (SFA), many important issues and techniques in SFA were not well elaborated in the previous surveys, namely…
Abstract
Purpose
While there exist many surveys on the use stochastic frontier analysis (SFA), many important issues and techniques in SFA were not well elaborated in the previous surveys, namely, regular models, copula modeling, nonparametric estimation by Grenander’s method of sieves, empirical likelihood and causality issues in SFA using regression discontinuity design (RDD) (sharp and fuzzy RDD). The purpose of this paper is to encourage more research in these directions.
Design/methodology/approach
A literature survey.
Findings
While there are many useful applications of SFA to econometrics, there are also many important open problems.
Originality/value
This is the first survey of SFA in econometrics that emphasizes important issues and techniques such as copulas.
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José Solana Ibáñez, Manuel Caravaca Garratón and Antonio Soto Meca
The improvement in the efficiency of public management leads to an increase in the quality of services, boosting confidence in institutions and thus generating a multiplier…
Abstract
Purpose
The improvement in the efficiency of public management leads to an increase in the quality of services, boosting confidence in institutions and thus generating a multiplier effect. This paper aims to update the literature on the data envelopment analysis (DEA), which uses a frontier methodology, for measuring the efficiency applied to the defence sector.
Design/methodology/approach
Two main research areas are related through this study: Defence Economics and Efficiency and Productivity Analysis. The frontier methods for measuring technical efficiency are grouped into parametric, non-parametric and semi-parametric. The DEA literature review in the selected sector allows to identify three main fields of work that are discussed in detail.
Findings
Existing empirical research has hardly applied bootstrapping methods to remove bias from the estimates. No empirical work has applied an analysis of efficiency determinants by the inclusion of exogenous variables.
Originality/value
The managerial implications of efficiency are numerous. A line of research is proposed to examine the extent to which efficiency improvements have an impact on reputation and, therefore, on the image of and confidence in institutions. The link between Defence Economics and Corruption Economics is also considered.
Propósito
La mejora de la eficiencia de la gestión pública conduce a un aumento de la calidad de los servicios, impulsando la confianza en las instituciones y generando así un efecto multiplicador. El presente trabajo tiene por objeto actualizar la literatura sobre la metodología frontera de medición de la eficiencia DEA, aplicada al sector de la Defensa.
Diseño/metodología/enfoque
A través de este estudio, se relacionan dos áreas principales de investigación: Economía de la Defensa y Análisis de Eficiencia y Productividad. Los métodos frontera para medir la eficiencia técnica se agrupan en paramétricos, no paramétricos y semiparamétricos. La revisión de la literatura DEA en el sector seleccionado permite identificar tres campos de trabajo principales que se discuten en detalle.
Resultados
La investigación empírica existente apenas ha aplicado métodos bootstrap para eliminar el sesgo de las estimaciones. Ningún trabajo empírico ha aplicado un análisis de determinantes de la eficiencia mediante la inclusión de variables exógenas.
Originalidad/valor
Las repercusiones de la eficiencia en la gestión son numerosas. Se propone una línea de investigación para examinar en qué medida las mejoras de la eficiencia repercuten en la reputación y, por consiguiente, en la imagen y la confianza en las instituciones. También se considera el vínculo entre la Economía de la Defensa y la Economía de la Corrupción.
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Stéphane Hamayon, Florence Legros and Yannick Pradat
The authors aim to demonstrate the importance of taking into account “mean reversion” in asset prices and show that this type of modeling leads to a high share of equities in…
Abstract
Purpose
The authors aim to demonstrate the importance of taking into account “mean reversion” in asset prices and show that this type of modeling leads to a high share of equities in pension funds’ asset allocations.
Design/methodology/approach
First, the authors will study the long-run statistical characteristics of selected financial assets during the 1895-2011 period. Such an analysis corroborates the fact that, for long holding periods, equities exhibit lower risk than other asset classes. Moreover, they will provide empirical evidence that stock market returns are negatively skewed in the short term and show that this negative skewness vanishes over longer time horizons. Both these characteristics favor the use of a semi-parametric methodology.
Findings
This empirical study led to two major findings. First, the authors noticed that the distribution of stock returns is negatively skewed over short time horizons. Second, they observed that the fat-tailed shape of the returns distribution disappears for time periods longer than five years. Finally, they demonstrated that stock returns exhibit “mean-reversion”. Consequently, the optimization program should not only take into account the non-Gaussian nature of returns in the short run but also incorporate the speed at which volatility “mean reverts” to its long-run mean.
Originality/value
To simulate portfolio allocation, the authors used a Cornish–Fisher Value-at-Risk criterion with the advantage of providing an allocation that is independent of the saver’s preferences parameters. A backtesting analysis including a calculation of replacement rates shows a clear dominance of the “non-Gaussian” strategy because the retirement outcomes under such a strategy would be positively affected.
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Feng Yao, Qinling Lu, Yiguo Sun and Junsen Zhang
The authors propose to estimate a varying coefficient panel data model with different smoothing variables and fixed effects using a two-step approach. The pilot step estimates the…
Abstract
The authors propose to estimate a varying coefficient panel data model with different smoothing variables and fixed effects using a two-step approach. The pilot step estimates the varying coefficients by a series method. We then use the pilot estimates to perform a one-step backfitting through local linear kernel smoothing, which is shown to be oracle efficient in the sense of being asymptotically equivalent to the estimate knowing the other components of the varying coefficients. In both steps, the authors remove the fixed effects through properly constructed weights. The authors obtain the asymptotic properties of both the pilot and efficient estimators. The Monte Carlo simulations show that the proposed estimator performs well. The authors illustrate their applicability by estimating a varying coefficient production frontier using a panel data, without assuming distributions of the efficiency and error terms.
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