Showing papers on "Data envelopment analysis published in 2004"

Data Envelopment Analysis: Theory and Techniques for Economics and Operations Research

Abstract: 1. Introduction and overview 2. Productivity, efficiency, and data envelopment analysis 3. Variable returns to scale: separating technical and scale efficiencies 4. Extensions to the basic DEA models 5. Non-radial models and Pareto-Koopmans measures of technical efficiency 6. Efficiency measurement without convexity assumption: free disposal hull analysis 7. Dealing with slacks: assurance region/cone ratio analysis, weak disposability, and congestion 8. Efficiency of merger and break up of firms 9. Efficiency analysis with market prices 10. Nonparametric approaches to production analysis 11. Measuring total factor productivity change over time 12. Stochastic approaches to data envelopment analysis 13. Looking ahead.

Measuring Information Technology's Indirect Impact on Firm Performance

Abstract: It has been recognized that the link between information technology (IT) investment and firm performance is indirect due to the effect of mediating and moderating variables. For example, in the banking industry, the IT-value added activity helps to effectively generate funds from the customer in the forms of deposits. Profits then are generated by using deposits as a source of investment funds. Traditional efficiency models, such as data envelopment analysis (DEA), can only measure the efficiency of one specific stage when a two-stage production process is present. We develop an efficiency model that identifies the efficient frontier of a two-stage production process linked by intermediate measures. A set of firms in the banking industry is used to illustrate how the new model can be utilized to (i) characterize the indirect impact of IT on firm performance, (ii) identify the efficient frontier of two principal value-added stages related to IT investment and profit generation, and (iii) highlight those firms that can be further analyzed for best practice benchmarking.

Efficiency of the Polish Banking Industry: Foreign Versus Domestic Banks

Abstract: The present paper investigates the efficiency of the Polish banking industry between 1997-2001. Our preferred methodology is Data Envelopment Analysis, which allows us to distinguish between cost, allocative, technical, pure technical, and scale efficiency. Additionally, we perform a number of tests to investigate whether domestic and foreign banks come from the same population. Finally, we attempt to shed light on the determinants of efficiency. Our results indicate that bank efficiency has not improved during the years analyzed. Whereas greenfield banks have achieved higher levels of efficiency than domestic banks, foreign banks that acquired domestic institutions have not succeeded in enhancing their efficiency.

Foreign bank entry, deregulation and bank efficiency: Lessons from the Australian experience

Abstract: This study considers the impact of foreign bank entry on banking efficiency in Australia during the post-deregulation period 1988–2001. Using Data Envelopment Analysis, Malmquist Indices and stochastic frontier analysis, we find foreign banks more efficient than domestic banks, which however did not result in superior profits. Major Australian banks have used size as a barrier to entry to new entrants. Furthermore, bank efficiency has increased post-deregulation and the competition resulting from diversity in bank types was important to prompt efficiency improvements. Finally, the recession of the early 1990s resulted in a distinct shift in the process of efficiency changes.

Economic Efficiency and Frontier Techniques

Abstract: Most of the literature related to the measurement of economic efficiency has based its analysis either on parametric or on non-parametric frontier methods. The choice of estimation method has been an issue of debate with some researchers preferring the parametric and others the non-parametric approach. The aim of this paper is to provide a critical and detailed review of both core frontier methods. In our opinion, no approach is strictly preferable to any other. Moreover, a careful consideration of their main advantages and disadvantages, of the data set utilized, and of the intrinsic characteristics of the framework under analysis will help us in the correct implementation of these techniques. Recent developments in frontier techniques and economic efficiency measurement such as Bayesian techniques, bootstrapping, duality theory and the analysis of sampling asymptotic properties are also considered in this paper.

Efficiency measurement using a latent class stochastic frontier model

Abstract: Efficiency estimation in stochastic frontier models typically assumes that the underlying production technology is the same for all firms. There might, however, be unobserved differences in technologies that might be inappropriately labeled as inefficiency if such variations in technology are not taken into account. We address this issue by estimating a latent class stochastic frontier model in a panel data framework. An application of the model is presented using Spanish banking data. Our results show that bank-heterogeneity can be fully controlled when a model with four classes is estimated.

Negative data in DEA: a directional distance approach applied to bank branches

Abstract: This paper is drawn from the use of data envelopment analysis (DEA) in helping a Portuguese bank to manage the performance of its branches. The bank wanted to set targets for the branches on such variables as growth in number of clients, growth in funds deposited and so on. Such variables can take positive and negative values but apart from some exceptions, traditional DEA models have hitherto been restricted to non-negative data. We report on the development of a model to handle unrestricted data in a DEA framework and illustrate the use of this model on data from the bank concerned.

Combining dea window analysis with the malmquist index approach in a study of the canadian banking industry

Abstract: The banking industry in Canada is essentially an oligopoly with five large participants controlling about 90% of the market. To evaluate the industry's performance over time, we need to deal with the problem of a small number of DMU's compared to the number of relevant inputs and outputs. To overcome this problem we use data envelopment analysis (DEA) window analysis, whereby efficiency scores for the 20 year period 1981–2000 are obtained. To measure productivity changes over time, Malmquist indices can be calculated from DEA scores. Using DEA window analysis scores, however, raise the question of how to define the “same period frontier” in a DEA window analysis. We show that for both the adjacent and the base period Malmquist index and for all suggested definitions of same period frontier, the standard decomposition into frontier shift and catching up effects gives inappropriate results when Malmquist indices are based on DEA window analysis scores.

An Application of DEA Windows Analysis to Container Port Production Efficiency

Abstract: There have been various analyses of the efficiency of container port (or terminal) production using Data Envelopment Analysis (DEA) based on cross-sectional data. When time is not considered, the efficiency results derived using this approach can be biased. In order to overcome this problem, this paper applies DEA windows analysis, utilising panel data, to a sample of the world’s major container ports in order to deduce their relative efficiency. The results suggest that estimates of container port efficiency fluctuate over time. The paper concludes that existing programming methods for estimating efficiency are inadequate in capturing the long-term increased efficiency and competitiveness that accrue from significant investments.

Measuring Cost Efficiency in European Banking: A Comparison of Frontier Techniques

Abstract: This paper investigates the consistency of efficiency frontier methods on European banking samples. We measure the cost efficiency of banks from five European countries (France, Germany, Italy, Spain, Switzerland) with three approaches: stochastic frontier approach, distribution-free approach, and data envelopment analysis. We compare means, correlation coefficients, two public policy issues, and the correlation with standard measures of performance. In general, we conclude in favor of the lack of robustness between approaches, even if there are some similarities in particular between parametric approaches. We do, however, observe some correlation between all frontier approaches and standard measures of performance.

Efficiency in European Seaports with DEA: Evidence from Greece and Portugal

Abstract: In this paper, we compare the seaport efficiency of two European countries, Greece and Portugal, using data envelopment analysis (DEA). The international benchmarking procedure is implemented, in which the seaports in each country are compared against each other. The broader aim of this study is to seek out those best practices that will lead to improved performance in the context of European seaport policy. We rank the seaports according to their total productivity for the period 1998–2000. Economic implications arising from the study are considered.

Centralized Resource Allocation Using Data Envelopment Analysis

Abstract: While conventional DEA models set targets separately for each DMU, in this paper we consider that there is a centralized decision maker (DM) who “owns” or supervises all the operating units. In such intraorganizational scenario the DM has an interest in maximizing the efficiency of individual units at the same time that total input consumption is minimized or total output production is maximized. Two new DEA models are presented for such resource allocation. One type of model seeks radial reductions of the total consumption of every input while the other type seeks separate reductions for each input according to a preference structure. In both cases, total output production is guaranteed not to decrease. The two key features of the proposed models are their simplicity and the fact that both of them project all DMUs onto the efficient frontier. The dual formulation shows that optimizing total input consumption and output production is equivalent to finding weights that maximize the relative efficiency of a virtual DMU with average inputs and outputs. A graphical interpretation as well as numerical results of the proposed models are presented.

Measuring the Efficiency of British Universities: A Multi-Period Data Envelopment Analysis.

Abstract: This paper uses data envelopment analysis to examine the technical efficiency (TE) of 45 British universities in the period 1980/81–1992/93. This period was chosen primarily because it was characterized by major changes in public funding and in student : staff ratios. To shed light on the causes of variations in efficiency, TE is decomposed into pure technical efficiency, congestion efficiency and scale efficiency. The analysis indicates that there was a substantial rise in the weighted geometric mean TE score during the study period, although this rise was most noticeable between 1987/88 and 1990/91. The rising TE scores are attributed largely to the gains in pure technical efficiency and congestion efficiency, with scale efficiency playing a minor role. The Malmquist approach is then used to distinguish between changes in TE and intertemporal shifts in the efficiency frontier. The results reveal that total factor productivity rose by 51.5% between 1980/81 and 1992/93, and that most of this increase was ...

Resource Allocation Based on Efficiency Analysis

Abstract: The purpose of this paper is to develop an approach to a resource-allocation problem that typically appears in organizations with a centralized decision-making environment, for example, supermarket chains, banks, and universities. The central unit is assumed to be interested in maximizing the total amount of outputs produced by the individual units by allocating available resources to them. We will develop an interactive formal approach based on data envelopment analysis (DEA) and multiple-objective linear programming (MOLP) to find the most preferred allocation plan. The units are assumed to be able to modify their production in the current production possibility set within certain assumptions. Various assumptions are considered concerning returns to scale and the ability of each unit to modify its production plan. Numerical examples are used to illustrate the approach.

Financial liberalization and bank efficiency: a comparative analysis of India and Pakistan

Abstract: This paper provides a comparative analysis of the evolution of the technical efficiency of commercial banks in India and Pakistan during 1988–1998, a period characterized by far-reaching changes in the banking industry brought about by financial liberalization. Data Envelopment Analysis is applied to two alternative input–output specifications to measure technical efficiency, and to decompose technical efficiency into its two components, pure technical efficiency and scale efficiency. The consistency of the estimated efficiency scores are checked by examining their relationship with three traditional non-frontier measures of bank performance. In addition, the relationship between bank size and technical efficiency is examined. It is found that the overall technical efficiency of the banking industry of both countries improved gradually over the years, especially after 1995. Unlike public sector banks in India, public sector banks in Pakistan witnessed improvement in scale efficiency only. It is also found that banks are relatively more efficient in generating earning assets than in generating income. This is attributed to the presence of high non-performing loans. In addition, it is found that the gap between the pure technical efficiency of different size groups has declined over the years.

Efficiency in islamic banking: an empirical analysis of eighteen banks

Abstract: Are Islamic banks stable and efficient? This paper addresses this question. Technical, pure technical, and scale efficiency measures are calculated by utilizing non-parametric technique, Data Envelopment Analysis. Several conclusions emerge. First, the overall efficiency results suggest that inefficiency across 18 Islamic banks is small at just over 10 percent, which is quite low compared to many conventional counterparts. Islamic banks in the sample suffered from the global crisis in 1998-1999 but performed very well after the difficult periods. The findings indicate that there are diseconomies of scale for small-to-medium Islamic banks which suggests that mergers should be encouraged.

Measuring the economic inefficiency of Nepalese rice farms using data envelopment analysis

Abstract: A data envelopment analysis of a sample of 76 Nepalese rice farmers reveals average relative economic, allocative, technical, pure technical and scale inefficiencies as 34, 13, 24, 18 and 7 per cent, respectively. The significant variations in the level of inefficiency across sample farms are attributed to the variations in the ‘use intensities’ of resources such as seed, labour, fertilisers and mechanical power. In addition, a second stage Tobit regression shows the variation is also related to farm-specific attributes such as the farmers’ level of risk attitude, the farm manager’s gender, age, education and family labour endowment. Based on the empirical findings, policy implications and development strategies for improving efficiency of Nepalese rice farms are briefly discussed.

Performance based clustering for benchmarking of US airports

Abstract: Managing service operations is gaining significant attention in both academic and practitioner circles. In this broad area, performance evaluation and process improvement of airlines and air carriers has been the focus of several studies. Although efficient airport operations are critical for improved performance of airlines and air carriers, few studies have focused on airport performance measurement. This study evaluates the operational efficiencies of 44 major US airports across 5 years using multi-criteria non-parametric models. These efficiency scores are treated by a clustering method in identifying benchmarks for improving poorly performing airports. Efficiency measures are based on four resource input measures including airport operational costs, number of airport employees, gates and runways, and five output measures including operational revenue, passenger flow, commercial and general aviation movement, and total cargo transportation. The methodology presented here can be generalized to other industries and institutions.

Predicting bank performance with financial forecasts: A case of Taiwan commercial banks

Abstract: Data envelopment analysis (DEA) has been used as a tool for evaluating past accomplishments in the banking industry. However, due to a time lag, the results usually arrive too late for the evaluated banking institutions to react timely. This paper makes advanced predictions of the performances of 24 commercial banks in Taiwan based on their financial forecasts. The forecasts based on uncertain financial data are represented in ranges, instead of as single values. A DEA model for interval data is formulated to predict the efficiency. The predictions of the efficiency scores are also presented as ranges. We found that all the efficiency scores calculated from the data contained in the financial statements published afterwards fall within the corresponding predicted ranges of the efficiency scores which we had calculated from the financial forecasts. The results also show that even the bad performances of the two banks taken over by the Financial Restructuring Fund of Taiwan could actually be predicted in advance using this study.

North american containerport productivity: 1984-1997

Abstract: This paper undertakes two tasks: measurement of seaport infrastructure productivity growth in North America from 1984 to 1997, and exploration of several theorized causal relationships between infrastructure productivity and industry structure and conduct A methodology is presented, data envelopment analysis (DEA), for measuring infrastructure productivity Tobit regression is presented as a means of examining the determinants of infrastructure productivity in seaports The study supports the presence of economies of scale at the containerport and terminal level Among other factors, the longstanding relationship between seaports and the rail industry appears to remain a critical determinant of containerport infrastructure productivity

An Alternative Approach to Efficiency Measurement of Seaports

Abstract: A whole series of changes in world economic order in the last decade such as globalisation of production and consumption, and structural changes in inter- port relations, port-hinterland relationships and logistics have strengthened the role of ports as nodes in the global transport system. In such an environment, port production economics plays an important role in port management considerations. This paper reviews approaches to performance measurement and provides an examination of the applicability of alternative (four-stage) Data Envelopment Analysis to seaport efficiency measurement. The study finds that alternative DEA is a potentially powerful approach to the evaluation of the overall efficiency of seaports.