Technical Efficiency of Banks in Southeast Asia (original) (raw)
The Essays on Competitiveness, Efficiency, and Productivity: Methodological Issues and Applications
tions of the SCB measure using a distance function approach that demonstrate the relationship between competitiveness, eciency and productivity. This PhD thesis is organized as follows. Chapter 2 provides an extensive discussion and a summary of results of the papers contained in the thesis. The research papers themselves are presented in Chapters 3-8. 3 For simplicity we keep the title of the Policy Note for the paper. ing Paper No. 44. Washington D.C.
A primer on the theory and practice of efficiency and productivity analysis
2017
This paper introduces the theory and practice of benchmarking the efficiency and productivity of firms, and examines common methodological and empirical choices that researchers face regardless of whether they are performing non-parametric or parametric frontier analyses. We identify different decision forks that researchers encounter, and provide guidance on the options and sequence of steps that should be adopted in order to successfully undertake research in the field. We first summarize the main results of duality theory underlying economic benchmarking, and outline the most popular empirical methods available to undertake efficiency and productivity analyses: DEA and SFA. Afterwards, we discuss several strategies aimed at reducing the dimensionality of the analysis, present a series of models aiming to control for environmental (contextual) variables and endogenous regressors, and discuss the choice of orientation when assessing firms' efficiency using economic criteria. Subsequently we deal with the issue of enhancing the analysis to account for undesirable attributes, such as risk, or proper detrimental outputs like pollutants, waste, contaminants, etc. We next move on to present alternative definitions of temporal productivity change and their decomposition into several terms, such as efficiency change, technical change, scale effects, etc. Finally, dynamic efficiency measurement is discussed.
Industry level analysis of productivity growth under market imperfections
Indian Growth and Development Review, 2019
Purpose-This study aims to estimate total factor productivity (TFP) growth for the post-2008 period for selected industries in the manufacturing sector at NIC 3-digit. Total factor productivity growth (TFPG) estimates are based on the theoretical framework provided by studies such Hall (1988), Abraham et al. (2009) and Crepon et al. (2005) that incorporate market imperfection in labour and product market, thereby modifying the traditional TFP estimation as Solow Residual. Design/methodology/approach-Based on the theoretical model that incorporates market imperfections in labour as well as product market in modifying the TFP estimates using the Levinsohn-Petrin framework of empirical estimation, the authors have calculated industry wise TFPG for 62 industries at NIC 3-digit level. Findings-The study finds three distinct trends: first, there are considerable industrial disparities in productivity growth in terms of TFP. The estimates have been found to be higher than the conventional Solow Residual for most industries, indicating the role played by market imperfections in affecting the conventional measure of productivity growth. Second, estimates of bargaining power are found to be lower than those compared to the earlier estimates in Maiti (2013) for the Indian organised manufacturing case for 1998-2005. This observation is commensurate with the observation in recent years of a falling share in labour wage in total output in organised manufacturing sector. Finally, the study also found a statistically significant contribution of greater mechanisation on TFPG while an adverse effect of the rising dependence of organised manufacturing on contractual labour. Originality/value-The role of market imperfections in measuring TFPG has been undertaken, and it has been found to be an important factor, as the estimated measures vary from the conventional measures of TFPG. Moreover, the study has considered a very recent period from 2008-2015 in estimating TFPG, as well as analysing the factors behind the trends in TFPG at industrial level.
2009
Based on Cuesta (2000), this paper develops a stochastic frontier production model that allows for different groups of firms to have different patterns of technical efficiency over time. The authors apply the model to the Malaysian manufacturing sector to decompose total factor productivity growth into technical efficiency change and technical progress for different firm sizes— e.g., large and small—in seven industries during 2000–2004. The empirical results indicate that technical efficiency has worsened across all industries and firm sizes. In contrast, evidence of substantial technical progress was found in all industries. In fact, technical progress has been larger than technical efficiency deterioration in most industries and firm sizes, leading to total factor productivity growth. The analysis identifies the industries and firm sizes that lag the most in productivity, and thus have the greatest scope for policies that facilitate productivity growth.
Economic performance and “frontier” efficiency: A product life-cycle approach
Journal of Productivity Analysis, 1989
We propose to introduce some economic performance variables of the firms and relate these with the corresponding "frontier" efficiency measures of 13 industries of the Belgian manufacturing sector in 1978. In order to find groups of similar firms by applying a cluster technique, we assume that this relationship is of a product life cycle nature. In the light of the product life cycle scheme itself and variations of it we can consider the possible explanatory variables of technical inefficiency in each group of firms as sources which intensify or slowdown the economic performance of the firm under consideration. Some cautious characterization of the top and bottom level clusters is formulated and linked to the efftciency issue.
2019
Agricultural area Bojonegoro's food crop is the area where most of the people in farming even contribute to more than 35% of East Java's agriculture. This study employed a stage of analysis, namely the calculation stage of agricultural productivity of food crops by using Data Envelopment Analysis (DEA) techniques. The results of the Bojonegoro Regency Regency can be seen from the average efficiency of the Bojonegoro Regency 0.88725; Tuban Regency area is 0.897875 and Lamongan Regency area is 0.855. From the above data it can be seen that on average, the Tuban Regency has a good efficiency value compared to Bojonegoro and Lamongan Regencies
Efficiency and productivity analyses of Indonesian manufacturing industries
Journal of Asian Economics, 2006
This study estimates the technical efficiencies and total factor productivity (TFP) growths in food, textile, chemical and metal products industries from 1993 to 2000 in Indonesia by using the stochastic frontier model. Furthermore, the determinants of inefficiency are also analyzed and TFP growth is decomposed into technological progress, a scale component, and efficiency growth. The results reveal that the food, textile, chemical and metal products sectors are on average 50.79%, 47.89%, 68.65% and 68.91% technically efficient, respectively. It is noted that ownership contributed to technical inefficiencies in the food sector; location and size contributed to technical inefficiencies in the textile sector, whereas size, ownership and age contributed to inefficiencies in the chemical and metal products sectors. We note that productivity in food, textile, and metal products sectors decreased at the rate of 2.73%, 0.26%, and 1.65%, respectively, but increased at a rate of 0.5% in the chemical sector. The decomposition of TFP growth indicates that the growths are driven positively by technical efficiency changes and negatively by technological progress in all four sectors.
On productivity performance gains of Indonesian firms
Managerial Finance, 2008
Purpose -The purpose of this paper is to develop a methodology to study profit vs non-profit seeking firms usefully to compare corporate performance. It aims to apply the methodology to measure if state vs non-state firms with different objectives are comparable in performance. If relevant, the paper also aims to comment on the applicability of this method to analysis of other firms, e.g. Islamic banks in Indonesia. Design/methodology/approach -The paper applies Malmquist data envelopment analysis method to different classes of firms: state vs non-state firms; aggregated at the industry and at national levels; and develop appropriate time trend analysis as well. Findings -The common belief that all state firms are inefficient is not upheld by test results: in some sectors (agriculture and chemicals) state firms are more efficient than private firms. Efficiency is very low, but did improve over time across all sectors and types of firms particularly before the 1997-1998 and in recent years. Efficiency is mostly achieved through technology adoption (technological change) accounts for most efficiency gains. Research limitations/implications -This study overturns findings of many accounting performance based studies and revisits policy implications. Practical implications -No one policy fits all in Indonesia for privatization programme. Originality/value -The paper provides more valid methodology to compare state firms with nonstate firms for the first time.
Identifying productivity blemishes in Pakistan automotive industry: a case study
Purpose -The purpose of this research is to identify the prevalent condition of productivity in the automotive manufacturing industry of Pakistan and to indicate the possible areas for enhancing productivity. Design/methodology/approach -Secondary data for the last ten years were gathered. Total productivity and all partial productivities were computed using methodology proposed by Sumanth, and total factor productivity (TFP) was computed using Cobb-Douglas production function. Regression analysis and Pearson correlations were run to determine labor elasticity and capital elasticity. Findings -Results indicated very low levels of labor productivity and capital productivity, resulting in huge losses and stagnant growth of these firms. Increasing returns to scales (IRTS) with high values of labor elasticity and low and even negative value of capital elasticity were computed. Low values of TFP showed minimal utilization of technology in these firms. Research limitations/implications -One of the limitations of this research is that only two automotive manufacturing companies of Pakistan i.e. Honda Atlas and Indus Motors were targeted, which limits the generalizability of findings. Practical implications -Findings of this research revealed that effective utilization of technology can enhance the productivity of Pakistani manufacturing firms significantly. IRTS with high values of labor elasticity and low value of capital elasticity depict the areas of productivity enhancement. Originality/value -In Pakistan not enough effort has been put into measuring the productivity of manufacturing industry. The contribution of this paper is that it indicates the productivity blemishes in this industry and also the areas of focus for productivity enhancement.
PRODUCTIVITY AND COMPETITIVENESS -AN ANALYSIS
The paper explores the impacts of globalization on industrial performance and productivity. It also records the effects of ISO certification on industries' image and performance. The hypotheses were tested to know how far these statements hold good. For that Chi-Square tests were carried out to know the impacts of globalization and competitions in the present industrial scenario. Regression analysis also highlights the relation between income and Category of industries in the estate considered for the study. The structured questionnaire was used as a tool to collect primary data to use for the statistical analysis. The reliability statistic, Cronbatch's alpha suggests that questionnaire is with consistency and can be used for the analysis. It is concluded that globalization and competitiveness are strongly correlated with improved industrial performance and productivity scenario.
A Note on Technical Efficiency, Productivity Growth and Competitiveness
2010
Productivity and efficiency growth enhances competitiveness'. Similarly formulated statements are common in the literature on the economic performance of firms, industries and nations. This conventional perception in the economic literature, originating from trade and growth theory models, however, lacks a clearly defined mathematical formulation. Earlier work by and Nishimizu and Page (1986) provides an elegant formalization of the relationship between the productivity growth and competitiveness measured by the Domestic Resource Costs (DRC) ratio. However, the relationship between technical efficiency and competitiveness has not been addressed in the literature. Moreover, the DRC is a biased measure of competitiveness. We propose static and dynamic decompositions of competitiveness measured by the unbiased Social Cost Benefit Ratio (SCB) indicator using a distance function approach, and demonstrate these decompositions using simulated data. These decompositions extend earlier work to formalize the relationship between technical efficiency, productivity and competitiveness, and demonstrate that competitiveness is also influenced by other factors that can override the effects of efficiency or productivity improvements.
Overview of productivity analysis: history, issues and perspectives
2018
This chapter provides a wide-ranging interdisciplinary overview of productivity analysis, which also serves to introduce the chapters in the Handbook. It begins with an exploration into the significance of productivity growth, for business, for the economy, and for social economic progress. The chapter continues with a treatment of how productivity is defined, measured, and implemented. It then addresses two important empirical issues. The first involves productivity dispersion, and the productivity dynamics that would either lead to a reallocation of resources that would reduce dispersion and increase aggregate productivity, or allow dispersion to persist behind barriers to productivity-enhancing reallocation. The second involves a search for the drivers of (or impediments to) productivity growth, some of which are organizational in nature and under management control, and others of which are institutional in nature and beyond management control but subject to public policy intervention.
Short- and Long-run Technical Efficiency Analysis: Application to Ethiopian Manufacturing Firms
Social Science Research Network, 2019
This study attempts to investigate the level of transient and persistent technical efficiencies of large-and medium-scale manufacturing establishments in Ethiopia. A stochastic frontier approach was used for Cobb-Douglas production technology and a panel data set (1996-2015) was developed to obtain the coefficients of technical efficiency. The determinants of both components of efficiency were obtained while using the Tobit model. Results show that labor and real capital input coefficients are statistically significant, with positive input elasticities of 0.54% and 0.19%, respectively. The coefficient of the time trend variable, which captures the effect of exogenous technical progress on real value added by shifting the production frontier, is 0.019 (1.9%). Thus, as a year passes, the production frontier shifts outward due to technical change, which results in the increase of real value by 1.9%. The mean time-varying (short run), persistent (long run), and overall technical effciency effects are 64.2%, 57.2%, and 36.7%, respectively. Thus, firms can increase their output by 63.3% by removing transient and structural factors without increasing their input usage nor changing their technology. Particularly, trade variables have positive effects on transient efficiency but negative effects on persistent efficiency. Capital intensity has a negative coefficient in both cases, whereas average wage has a positive coefficient in both cases. Hence, policymakers, such as managers and public regulatory bodies, should give due attention to transient and structural problems. This study suggests that labor quality should be improved, which requires high average wage and participation in the global market. Such an improvement can be achieved by solving structural rigidities related to customs, promoting capital productivity updating and renovating the existing one, and importing capital goods that contain new technology.
Productivity measurement: alternative approaches and estimates
2003
This paper provides a review of conceptual and methodological issues in measuring productivity. Attention is given to the concept of productivity and the relationship between productivity and technological change. Different approaches to measuring ...
International Journal of Economics & Management Sciences
In an era of continuing rising prices of commodities, fluctuating energy costs, high taxes, government regulations, capital shortage, worker dissatisfaction, intense foreign competition and inadequate productivity, throws a big challenge in managing manufacturing unit in SME sector. The performance of Indian SMEs is deteriorating rapidly and continually. For making these firms on track, certain patented methods and techniques need to be implemented for reducing the cost of manufacture. As the global companies are putting best drives to cut down the manufacturing cost by using all practices at par with productivity concept, it has been seen that Indian SMEs are still a victim of production or quantity game. Such a production-oriented philosophy is eroding its growth. In this context, we have put efforts to understand the concept of productivity as understood by SMEs and the status of its implementation in manufacturing system which has been found alarming. Based on the research findings, we have suggested certain drivers which need to be run immediately for the sustainability and growth. The paper further discusses the implications of study and highlights the new streams for future researchers in this area.