Three essays on behavioural biases of mutual fund managers: overconfidence, disposition effect and tournaments

Sweepstakes: A network DEA approach to mutual fund tournamentsExtended abstract en españolUn enfoque Network DEA para los torneos de fondos de inversión1. IntroducciónEl afán por obtener rentabilidad de los inversores en fondos de inversión es un fenómeno empírico bien documentado. De hecho, la investigación ha demostrado que los inversores tienden a asignar capital basándose en el rendimiento pasado de los fondos de inversión. Está bien establecido que un rendimiento relativo superior de los fondos de inversión se asocia con mayores entradas de dinero posteriores (Ben-David et al., 2022; Berk & Green, 2004; Ferreira et al., 2012; Sirri & Tufano, 1998). Por este motivo, el importante crecimiento experimentado por el sector de los fondos de inversión en las últimas décadas ha agudizado la competencia entre los gestores de fondos de inversión por las entradas de dinero y las comisiones basadas en los activos. La relación entre el rendimiento de los fondos de inversión y la posterior actitud de los gestores hacia el riesgo ha recibido una atención primordial en la literatura internacional. Varios estudios han documentado que los gestores de fondos de inversión modifican activamente el nivel de riesgo de sus carteras en función de su rendimiento relativo en el pasado. Algunos trabajos fundamentales que aportan pruebas de ello son Brown et al. (1996), Busse (2001), Chevalier & Ellison (1997) y Huang et al. (2011).En su investigación seminal, Brown et al. (1996) llegaron a la conclusión de que los gestores perdedores a medio plazo, al no tener mucho más que perder, apostarán y aumentarán la volatilidad de su cartera de fondos, mientras que los ganadores a medio año intentarán fijar su posición y jugar sobre seguro. Tras este estudio, varios autores llegan a una conclusión similar (Acker & Duck, 2006; Goriaev et al., 2005; Schwarz, 2012).Este comportamiento de torneo de los gestores de fondos se ve reforzado por la relación convexa entre el rendimiento previo y los flujos de dinero: Mientras que un porcentaje desproporcionado de las entradas totales se dedica a los fondos con buenos resultados, los inversores no retiran el dinero de los fondos de inversión con malos resultados en la misma proporción (Chevalier y Ellison, 1997; Gruber, 1996; Huang et al., 2007; Sirri y Tufano, 1998). Además, los gestores de fondos de inversión tienen otras preocupaciones que podrían aumentar su motivación para participar en torneos anuales: proteger su empleo (Kempf et al., 2009; Khorana, 1996; Qiu, 2003), ganar un salario más alto (Farnsworth & Taylor, 2006; Kempf et al., 2009) o labrarse una reputación entre sus colegas (Qiu, 2003).Sin embargo, estudios empíricos han revelado resultados contradictorios con respecto a la expectativa de que los perdedores apuestan mientras que los ganadores indexan. Existen pruebas en la literatura que apoyan la noción de que los ganadores son más propensos a apostar (Busse, 2001; Chevalier & Ellison, 1997; Qiu, 2003; Sheng et al., 2019). En lugar de ver estos hallazgos como contradictorios, podría haber matices que descubrir en la teoría del torneo que ha sido ampliamente estudiada tanto con técnicas paramétricas como no paramétricas. Nuestro enfoque en red pretende captar la dinámica real del torneo sin que exista ninguna forma funcional preestablecida entre los principales impulsores del comportamiento del torneo. Para analizar el torneo, dividimos el comportamiento del torneo en tres etapas: en primer lugar, ¿con qué eficiencia reaccionan los gestores de fondos de inversión a su rendimiento pasado en términos de riesgo de cartera? En segundo lugar, ¿con qué eficacia repercuten estos cambios de riesgo en su rendimiento posterior? Y, por último, ¿con qué eficacia atraen estos cambios de rendimiento entradas de dinero a los fondos? Para analizar mejor estas interacciones entre torneos, empleamos un Análisis Envolvente de Datos (DEA) en red. Dada la complejidad de la modelización de las finanzas comportamentales, el uso de modelos DEA en red, que no requieren el establecimiento a priori de formas funcionales entre los factores explicativos, podría ser especialmente útil en este ámbito. Por este motivo, resulta muy adecuado para modelizar patrones de comportamiento complejos, como el comportamiento en los torneos. El modelo de red de este estudio nos permite dividir esta interacción global en procesos individuales y así evaluar mejor cada etapa. Como resume Kao (2014), un sistema global puede considerarse eficiente, aunque sus procesos individuales no lo sean, en realidad. En cuanto al tema que nos ocupa, muchos modelos de torneos se centran únicamente en la reacción de los fondos de inversión a las clasificaciones de rendimiento anteriores y las consecuencias de rendimiento posteriores, pero omiten las posibles consecuencias en los flujos de dinero posteriores. Nuestro modelo supera esta limitación adoptando un enfoque global para analizar el sistema.Que sepamos, este estudio es el primero que aplica una DEA en red para evaluar el comportamiento de los torneos en el sector de los fondos de inversión. La presente investigación llena el vacío existente en la literatura sobre finanzas conductuales utilizando un modelo DEA en red para proporcionar información sobre los componentes secuenciales y dinámicos del comportamiento de los torneos. En este estudio, el objetivo principal es analizar la interacción entre la reacción al torneo, su recompensa en términos de rendimiento y la recompensa potencial en forma de entradas. 2. Datos y metodologíaLos datos primarios utilizados en este estudio se obtienen de la Comisión Nacional del Mercado de Valores (CNMV). Nuestra base de datos inicial incluye los fondos abiertos domiciliados en España que estuvieron en funcionamiento durante el periodo de estudio (enero de 2010 a diciembre de 2015). Este periodo muestral abarca los años con mayores salidas de dinero de la industria de fondos española en las dos décadas anteriores a 2012, junto a una significativa y fuerte recuperación de las entradas de dinero en 2014-2015 (Inverco, 2016). Esto da lugar a contextos de gestión extremadamente diferentes para identificar las prácticas del torneo a través de nuestro modelo propuesto. La base de datos inicial comprende 551 fondos. En total, se descartan 42 fondos indexados dado que no son de gestión activa y solo los fondos de gestión activa cumplirían los requisitos para el análisis del comportamiento de los torneos. Nuestro análisis se centra en las dos principales categorías de inversión de la industria española de fondos: Fondos de Renta Variable Euro y Renta Variable Nacional, que representan un total de 184 fondos. Obtuvimos datos sobre rendimientos diarios, activos netos totales (TNA) mensuales e informes trimestrales de participaciones en cartera.Finalmente, también excluimos un total de 35 fondos de esta simple porque la información reportada no cumple totalmente con la disponibilidad de datos requerida por nuestro modelo (por ejemplo, fondos terminados antes del 31 de diciembre o fondos que no reportan flujos de dinero posteriores para el primer trimestre porque fueron terminados antes del 31 de marzo). Con el fin de obtener resultados fiables para el análisis del torneo, exigimos que los fondos incluidos en un año determinado en el estudio existan en enero y sobrevivan al menos hasta marzo del año siguiente, cuando se computan los flujos. Nuestra muestra final consta de un total de 149 fondos de renta variable distintos y un total acumulado de 624 observaciones de años de fondos.De acuerdo con la revisión de los modelos DEA en red en Kao (2014), la Figura 1 corresponde a una ampliación de una estructura de red básica de dos etapas a una estructura de red básica de tres etapas. Nuestra estructura de red también incluye un componente dinámico y las distintas variables del modelo corresponden a puntos secuenciales en el tiempo para reflejar el comportamiento dinámico de los torneos de fondos de inversión. El uso de cuatro variables intermedias tanto como salidas de la Etapa de Reacción como entradas de la Etapa de Recompensa podría plantear problemas relacionados con la maldición de la dimensionalidad en nuestra estructura de tres etapas, por lo que debe prestarse especial atención a la convención DEA según la cual el número mínimo de unidades de decisión analizadas, en este caso los fondos de inversión, debe ser superior a tres veces el número de variables (Coelli et al., 2005).En la Etapa de Reacción, el fondo de inversión j reacciona a su clasificación de rendimiento en el periodo anterior, desde el mes t-6 hasta el mes t, modificando su nivel de riesgo a través de tres mecanismos diferentes: 1) el porcentaje de la cartera asignado a activos de renta variable como representante del activo más arriesgado, 2) la beta de la cartera como representante del riesgo sistemático, y 3) la concentración de la cartera como representante del riesgo idiosincrático. Esta cronología es coherente con el trabajo seminal de Brown et al. (1996) y estudios posteriores como Busse (2001) y Goriaev et al. (2005)), por citar algunos. En la Etapa de Recompensa, nuestro modelo evalúa la eficiencia de la gestión activa del riesgo. Esta eficiencia se evalúa en términos del impacto de la respuesta al torneo en las clasificaciones de rendimiento posteriores. Por último, en la fase de retribución, nuestro modelo va más allá y evalúa hasta qué punto el impacto del comportamiento en los torneos ha sido visible en términos de flujos monetarios. La literatura anterior ha aportado numerosas pruebas del fenómeno "el ganador se lo lleva todo", en el que los fondos ganadores captan una parte desproporcionada de las entradas totales (Chevalier & Ellison, 1997; Gruber, 1996; Huang et al., 2007; Qiu, 2003; Sirri & Tufano, 1998). Figura 1. Representación del modelo DEA en red.3. Resultados y ConclusionesEste estudio proporciona un modelo de torneo más matizado para el sector de los fondos de inversión y analiza la eficacia con la que los gestores reaccionan a sus clasificaciones provisionales de rentabilidad, la eficacia con la que modifican su cartera para mejorar sus clasificaciones de rentabilidad a final de año y, por último, la eficacia con la que los inversores recompensan estos cambios en las clasificaciones de rentabilidad a través de los flujos hacia el fondo en el trimestre siguiente. Hasta donde sabemos, este estudio es el primero que emplea el Análisis Envolvente de Datos en red (DEA) para modelizar la dinámica de comportamiento en el sector de los fondos de inversión.La aplicación de nuestro modelo a un mercado real arroja resultados empíricos que corroboran nuestras hipótesis iniciales. Nuestros resultados confirman lo complicado que resulta para los gestores de fondos aplicar una estrategia capaz de mejorar eficientemente sus resultados de fin de año en relación con los de sus homólogos. De hecho, los gestores de fondos pueden adoptar una amplia gama de estrategias y de nuestros resultados se desprende que la Etapa de Reacción no está correlacionada con la Etapa de Recompensa. Esto significa que la modificación eficaz de la exposición a la renta variable, la beta y la concentración de la cartera como resultado de los rangos de rentabilidad provisionales no está correlacionada de forma significativa con los flujos posteriores hacia el fondo. En consonancia con la bibliografía sobre flujos, el grado en que los gestores de fondos mejoran su clasificación de rentabilidad modificando la exposición a la renta variable, la volatilidad y la concentración de su cartera es un factor determinante de su capacidad para atraer flujos en el trimestre siguiente. Así pues, el éxito en la Etapa de Retribución, mejorando con éxito el rendimiento a final de año, es determinante en los resultados finales del torneo. Estas conclusiones refuerzan la validez del modelo que proponemos en este estudio. Nuestros resultados son robustos incluso cuando empleamos especificaciones de variables alternativas. Por último, no encontramos persistencia en la eficiencia de los torneos en las fases individuales ni tampoco en general. Nuestros resultados apoyan la idea de que seguir una estrategia de torneo persistente y sistemáticamente eficiente es difícil y complejo.<br /

An Applied Credit Scoring Model and Christian Mutual Funds Performance

This dissertation comprises two different financial essays. Essay 1, “An Applied Credit Score Model,” uses data from local credit union to predict the probability of default. Due to recent financial crisis regulation has been enacted that makes it essential to develop a probability of default model that will mitigate charge-off losses. Using discriminant analysis and logistic regression this paper will attempt to see how well credit score can predict probability of default. While credit score does an adequate job at classifying loans, misclassification of loans can be costly. Thus while credit score is a predictor, there is danger in relying solely on its information. Thus other variables are needed in order to more accurately be able to find the probability of default. Essay 2, “Christian Mutual Fund Performance,” draws attention to a much ignored type of funds, Christian mutual funds. The following questions are asked: How does Christian mutual fund perform compared to the market? Is there a difference in performance during recessions as indicated by literature? Is Christian mutual fund performance different than SRI funds? How do Catholic and Protestant fund perform? Looking at qualitative evidence, Christian mutual funds place much more importance on moral issue than SRI funds. Thus there is a clear difference in objectives and the type of screening that these two mutual fund pursue. Overall data reflects that screened data perform worse than the market, however during recession screened funds perform as well and at times better than the market. Christian mutual funds tends to perform worse than SRI funds

An Applied Credit Scoring Model and Christian Mutual Funds Performance

This dissertation comprises two different financial essays. Essay 1, “An Applied Credit Score Model,” uses data from local credit union to predict the probability of default. Due to recent financial crisis regulation has been enacted that makes it essential to develop a probability of default model that will mitigate charge-off losses. Using discriminant analysis and logistic regression this paper will attempt to see how well credit score can predict probability of default. While credit score does an adequate job at classifying loans, misclassification of loans can be costly. Thus while credit score is a predictor, there is danger in relying solely on its information. Thus other variables are needed in order to more accurately be able to find the probability of default. Essay 2, “Christian Mutual Fund Performance,” draws attention to a much ignored type of funds, Christian mutual funds. The following questions are asked: How does Christian mutual fund perform compared to the market? Is there a difference in performance during recessions as indicated by literature? Is Christian mutual fund performance different than SRI funds? How do Catholic and Protestant fund perform? Looking at qualitative evidence, Christian mutual funds place much more importance on moral issue than SRI funds. Thus there is a clear difference in objectives and the type of screening that these two mutual fund pursue. Overall data reflects that screened data perform worse than the market, however during recession screened funds perform as well and at times better than the market. Christian mutual funds tends to perform worse than SRI funds

Eficiência dos fundos de investimento verdes e fundos de investimento socialmente responsáveis dos EUA

Ao longo do tempo, questões relacionadas com o meio ambiente, sustentabilidade e problemas socias têm vindo a aumentar, o que tem despertado a atenção de toda a sociedade incluindo dos investidores em instrumentos financeiros. Assim, é importante perceber o trade-off risco/rendibilidade do investimento nestes instrumentos financeiros, nomeadamente em fundos de investimento socialmente responsáveis (FISR) e em fundos de investimento verdes (FIV). Neste contexto, foi selecionada uma carteira de FIV, uma carteira de FISR e outra de fundos convencionais (FC), dos Estados Unidos da América (EUA), com o objetivo de comparar a eficiência destas três carteiras, percebendo qual delas tem melhor desempenho quando comparadas entre si, que fundos são eficientes e quais os fatores de avaliação que determinam essa eficiência. As carteiras são constituídas por dez FIV, dez FISR e dez FC. A metodologia utilizada foi o Value-Based (Data Envelopment Analysis), cujos resultados mostram que os FISR e os FIV são mais eficientes que os FC para períodos de um e três anos, uma vez que nenhum fundo convencional se verificou eficiente, com os fatores selecionados para a avaliação. Para o período de cinco anos apesar de se verificaram dois FC eficientes, estes não superaram os FIV. Os resultados obtidos permitem perceber que será possível obter bons desempenhos investindo neste tipo de fundos, ou seja, parece que a consciência dos investidores de que as empresas sustentáveis são as empresas que permitem uma melhor qualidade de vida, está a tornar-se uma realidade

Efficiency and productivity in Sri Lanka’s banking sector: Evidence from the post-conflict era

After the end of the 26-year armed conflict between the Sri Lankan government and the ethnic Tamil rebels in 2009, Sri Lanka experienced a favourable macroeconomic environment with an improvement in security conditions, resettlement and the revival of economic activities in the Northern and Eastern regions of the country. The banking sector also recorded significant expansion with respect to the volume of transactions as well as geographical dispersion of banking services during this period, stimulated by the overall economic growth. The aim of this thesis is to conduct a thorough analysis of the technical efficiency and productivity of the Sri Lankan banking sector encompassing the period of post-conflict economic expansion beginning in 2009. To achieve this aim the thesis focuses on five main areas. First, it compares banking sector efficiency in the periods immediately before and after the end of the armed conflict in Sri Lanka. Second, it compares the efficiency of three mutually exclusive bank groups, namely foreign commercial banks, domestic commercial banks and domestic specialised banks. Third, it evaluates the potential determinants of banking sector efficiency, including the contribution of branch network expansion and the geographical dispersion of branches. Fourth, it evaluates productivity changes across the two periods (before and after the end of the armed conflict) for the three abovementioned banking groups. Fifth, it analyses disparities in banking sector efficiency across the nine regions of Sri Lanka, and the contribution of socio-economic factors to their efficiency

COMPARISON OF THE PERFORMANCE OF ISLAMIC MUTUAL FUNDS vs. ETHICAL AND CONVENTIONAL MUTUAL FUNDS

Mutual funds are one of the key contributors to the globalisation of financial markets and one of the main sources of capital flows to emerging economies. This study explores and measures the performance of global Islamic mutual funds through an econometric analysis. Specifically, this study conducted an empirical comparison of performances between Islamic, ethical, and conventional mutual funds using market indexes as benchmarks. In furthering the analyses, this study also explored the ‘Ramadan Effect’ and another comparison/or causality test between Islamic mutual funds and oil prices in the short/long run. Statistical techniques were used in analysing monthly net asset value (NAV), management fee, and Dow Jones Islamic market index (DJIMI), S&P 500 Index, FTSE4Good Global Index, MSCI AC World Index and oil prices include (i) the augmented Dickey-Fuller (ADF) test and the Phillips-Perron (PP) test; (ii) Granger causality; (iii) cointegration, and (iv)the Generalized Method of Moments Regression. Findings of the study demonstrate that oil price did not cause Islamic mutual fund’s performance during the period covered, while Islamic mutual fund’s performance causes oil prices. Since demand and supply equilibrium on oil is unpredictable and oil is considered both as an investment commodity and a fuel, the stock market leads oil prices. Results also show that there is no significant difference between the performance of Islamic mutual funds and those of ethical and conventional mutual funds and between the Islamic mutual funds and the well-known Islamic indices during the whole period or during the bullish or bearish periods

Efficiency and productivity analysis of global not-for-profit microfinance institutions:data envelopment analysis approach

Microfinance has been regarded as the one of the effective solutions in poverty alleviation efforts globally. Its growth has been driven by not‐for‐profit microfinance institutions in the form of non‐governmental organization, credit unions, cooperatives and others. Microfinance sits at the unique position between social welfare programme and financial institutions as it faces dual objectives of outreach to the poor and financial sustainability. Due to its unique dual objectives, it is imperative to undertake a comprehensive performance and productivity assessment as microfinance institutions currently hold an important roles in improving the lives of the poor globally. This thesis thus has multi‐faceted objectives: firstly, it seeks to propose a comprehensive performance measurement that can evaluate these objectives comprehensively, as opposed to current focus on trade‐offs between microfinance dual objectives and shortsighted focus on financial indicator, yet proficient to track microfinance performance and total factor productivity over time. It therefore proposes Data Envelopment Analysis (DEA) as adept measurement for microfinance institutions globally, especially using hyperbolic, non‐oriented DEA model due to its benchmarking capability and DEA‐based Circular Malmquist Index in measuring total factor productivity under condition of unbalanced data, such as the case with microfinance. This thesis also proposes Social‐Financial Efficiency Matrix as a performance monitoring tool for microfinance. Secondly, this thesis seeks to provide thought‐provoking empirical evidence to the performance comparison between Islamic and conventional microfinance. Thirdly, it seeks to explore the relationship between loan methodology and microfinance efficiency in six different regions globally, in contributing to the search of an adept loan method that can boost efficiency. Fourthly, it seeks to analyse microfinance productivity globally in times of crisis, i.e. evaluating its resilience toward external shocks, so that improvement can be proposed for the future

Competition and Profitability in European Financial Services

Financial services firms play a key role in the European economy. The efficiency and profitability of these firms and the competition among them have an impact on allocation of savings, financing of investment, economic growth, the stability of the financial system and the transmission of monetary policy. This collection of research contributions includes evaluations of trends in the European financial service industry and examinations of the driving forces of efficiency, competition and profitability of financial firms and institutions in Europe. The papers have been written by leading academics and researchers in the field, who specialize in strategic, systematic and policy issues related to the European financial services industry. This edited collection will be will be essential reading for students and academics but will also be of interest to financial practitioners and government officials interested in acquiring a deeper understanding of this complex issue

Water use efficiency and influence of management policies, analysis for the small-scale irrigation sector in South Africa

With the growing water scarcity, the need for more efficient water use has worldwide increased in importance. In addition, cost-recovery is now widely acknowledged as a cornerstone of sustainable water management. This research aims to contribute to improved water management in the small-scale irrigation sector in South Africa, which also faces these challenges. In a first analysis the economic production value of irrigation water was determined. Results show that without government subsidies on inputs, the profitability of many smallholders was low. Achieving full cost recovery therefore appears to be problematic for the current users. In the next part the concept of sub-vector efficiencies is introduced as a measure for water use efficiency. The analysis shows that smallholders fail to reach their overall technical efficiency levels when it concerns water use. Even using the current technologies the potential to reallocate irrigation water to other water demands is substantial. In a third part an innovative two-steps simulation model was developed to study the impact of water pricing. The model introduces a representation of the technology and smallholder efficiencies in a profit maximisation model. Farmers appear to be quite responsive to water charges and adjust their water use, even when the charge is relatively low. Pricing water can thus be used to provide incentives for efficiency improvement. However, the introduction of a water price is also shown to significantly decrease farm profit, particularly for smaller farms. The last part of the study investigates the impact of improving the water rights system in South Africa. Using a contingent ranking experiment the WTP of smallholders for specific interventions is estimated. The results show that farmers are prepared to pay considerably higher water prices if this is connected with advancements in the water rights system. This implies that such interventions would improve the efficiency of the small-scale irrigation sector. A higher WTP for water is also interesting in the light of the cost recovery, because it allows the government to increase water charges. In general, this research shows how economic analyses can be used to inform policy making to improve water management

The impact of governance on efficiency: case studies on airports and seaports

Airports and seaports have experienced significant governance reforms over the last few decades. As major airports are argued to have market power, they are subject to some form of economic regulation. Airports used to be subject to rate-of-return regulation. More recently, there has been a reform in airport economic regulation and they are increasingly being subject to incentive based price-cap regulation and light-handed regulation or monitoring. In the policy debate, it is of interest to analyse whether price-cap regulation and light-handed regulation of airports are superior to rate-of-return regulation. In the case of seaports, there has been a reform in their governance model and a large number of seaports now follow the landlord seaport model. In a landlord seaport, the port authority is responsible for monitoring and coordination while specialized private terminal operators are responsible for cargo handling and seaport operations. Policy debates have focused on whether the landlord seaport model leads to superior performance in comparison to the service seaport model where most responsibilities are handled by the port authority or the public sector. Airports and seaports are increasingly being regulated by independent regulators because they are not susceptible to regulatory capture. Policy debates have also focused on whether independent regulators lead to a superior performance in comparison to dependent regulators. The first part of this thesis focuses on airport regulation and its impact on efficiency. We conduct a literature review of the theoretical and empirical literature on airport regulation and efficiency. We find that dual-till price-cap regulation and light-handed regulation are preferable to rate-of-return regulation from an efficiency perspective. We also find that while light-handed regulation leads to efficient airports, it does not necessarily constrain airport charges and hence does not lead to the cheapest airports. We find that independent regulators enhance airport performance. With respect to slot allocation, we find that slot allocation is superior to queuing in terms of capacity, delay and congestion management. However, we find that slot allocation based on economic principles is superior to administrative slot allocation. In this part of the thesis, we also identify gaps in the empirical literature which require further analysis. The next part of the thesis focuses on the impact of governance on the technical efficiency of major Indian seaports. This chapter uses a non-oriented slacks based measure of technical efficiency in the first stage and a fixed effects regression in the second stage in order to analyse the impact of governance on the technical efficiency of the major Indian seaports. From the first stage, we find that most of the seaports have a scope for improvement in technical efficiency. From the second stage analysis, we find that specialization has the highest positive impact on technical efficiency. We hence propose that the major Indian seaports have to specialize because they can benefit from economies of scale. With respect to ownership, we find that external stakeholder participation has a significant positive impact on technical efficiency. This gives evidence that the landlord seaport model is conducive to enhanced technical efficiency. With respect to competition, we find that competition from the non-major Indian seaports from within the state and along the coast has a significant negative impact on the technical efficiency of the major Indian seaports. We argue that this is because of the tiered governance framework, which results in excess capacity at the major Indian seaports. We propose that the seaports should have a common governance, institutional and regulatory framework, which can enhance their performance. With respect to regulation, we find that rate-of-return regulation by an independent regulator is superior to internal regulation by the port authority in terms of technical efficiency. We argue that this is because the independent regulator is not susceptible to regulatory capture unlike the port authorities. The last part of the thesis focuses on the impact of governance on the technical efficiency of container ports from the Far East and Asian region. This chapter uses stochastic frontier analysis in order to estimate a production frontier. It makes use of a single step procedure which can be used to estimate the production frontier as well as to estimate the impact of the governance-related contextual variables on the technical efficiency of these container ports. We estimate the individual as well as the combined effects of the governance-related contextual variables on the technical efficiency of these container ports. From the individual effects model, we find that majority private container ports are significantly more technically efficient in comparison to minority private container ports. This gives evidence that the landlord seaport model is conducive to enhanced technical efficiency. With respect to competition, from the individual effects model, we find that both hinterland and transshipment competition enhance the technical efficiency of these container ports. With respect to regulation, from the individual effects model, we find that regulation by an independent regulator is the most conducive to enhanced technical efficiency. In the combined effects model, a majority private container port which faces high hinterland competition and has no economic regulation is taken as the base case. Most of the other combinations of the contextual variables result in a significantly lower technical efficiency in comparison to the base case. However, a majority private container port which faces low hinterland competition and either has no economic regulation or is regulated by an independent regulator is significantly more technically efficient in comparison to the base case. Our results further show that when a port is majority private and faces low hinterland competition, regulation by an independent regulator results in a significantly higher technical efficiency in comparison to having no economic regulation. We argue that this is caused because there is excessive entry and hence majority private container ports which face low hinterland competition and are regulated by an independent regulator are the most technically efficient. We propose that along with the setting up of independent regulators for container ports, policymakers should also ensure that entry is at an optimal level, which can result in competition that is effective and technical efficiency enhancing