Identifying an Australian 'Shadow' Benefit / Cost Ratio for Public Projects

This paper examines the social opportunity cost of a hypothetical public project in Australia and compares these values with the cost of the project as measured by factor prices. Since 2001, the Australian taxation system has included an ad valorem tax, the Goods and Services Tax, however relatively little analysis of the impact of this tax on public project evaluation methods has been undertaken. This tax creates divergences between social opportunity cost and conventional cost measures. Therefore it is recommended that shadow prices be applied to pubic projects. Following Campbell (1975), a shadow price can be introduced into Australian project evaluation in the form of a cut-off benefit cost ratio. The calculations reported on in the paper indicate that this ratio lies between 1 and 1.3 for public projects in Australia.allocative efficiency, cost benefit analysis, efficiency, optimal taxation, project evaluation, social discount rate

Identifying an Australian ‘Shadow’ Benefit / Cost Ratio for Public Projects

This paper examines the social opportunity cost of a hypothetical public project in Australia and compares these values with the cost of the project as measured by factor prices. Since 2001, the Australian taxation system has included an ad valorem tax, the Goods and Services Tax, however relatively little analysis of the impact of this tax on public project evaluation methods has been undertaken. This tax creates divergences between social opportunity cost and conventional cost measures. Therefore it is recommended that shadow prices be applied to pubic projects. Following Campbell (1975), a shadow price can be introduced into Australian project evaluation in the form of a cut-off benefit cost ratio. The calculations reported on in the paper indicate that this ratio lies between 1 and 1.3 for public projects in Australia.allocative efficiency; cost benefit analysis; efficiency; optimal taxation; project evaluation; social discount rate

Efficiency and University Size: Discipline-wise Evidence from European Universities

Strategic management of universities must build the best possible relation between inputs and outputs. One relevant question, in this perspective, is whether the unit is making the best use of existing resources, or whether technical efficiency is in place. Here we address the question of technical efficiency with respect to university’s size. The crucial concept in this analysis is conditional efficiency and the ratio of size-conditional to unconditional efficiency measures. In particular we take use of robust order-m efficiency scores presented in Cazals, Florens and Simar (2002) and generalized in Daraio and Simar (2005a,b) to analyze data from four European countries and four different research fields. Our results are still explorative and mainly show how heterogeneous international datasets could be used to analyze productivity differences.Universities;efficiency;International comparisons

Profit Efficiency and The Influence of Financial Performance Measures on Cost Efficiency of Rural Banks in Indonesia

Efficiency for a bank is an important aspect to pay attention to realize a healthy and sustainable financial performance. This research aims to analyze the profit and cost efficiency of Rural Banks in Indonesia for the 2018-2022 period and examine the influence of financial performance measures on the cost efficiency of Rural Banks. The sample for this research was 497 BPRs in West Java, East Java, and Bali. Efficiency testing uses stochastic frontier analysis with an intermediation approach for cost efficiency and a production approach for profit efficiency. Financial performance measures represented by the NPL ratio, LDR, CAR, and total assets were tested using Tobit regression. The results of cost efficiency using the intermediation approach show that BPR in the three regions from 2019 to 2022 is in an inefficient condition. Similar to cost efficiency, the results of profit efficiency using a production approach show that BPRs from these three regions from 2019 to 2022 are in an inefficient condition. Based on the Tobit regression results, financial performance measures influence cost efficiency. Financial performance measures that influence cost efficiency are NPL, CAR, and total assets. The LDR ratio does not affect on cost efficiency

Resource use efficiency of US electricity generating plants during the SO2 trading regime: A distance function approach.

This paper measures resource use efficiency of electricity generating plants in the United States under the SO2 trading regime. Resource use efficiency is defined as the product of technical efficiency and environmental efficiency, where the latter is the ratio of good output (electricity) to bad output (SO2) with reference to the best practice firm, i.e., one that is producing an optimal mix of good and bad outputs. This concept of environmental efficiency is similar to that of output oriented allocative efficiency. Using output distance functions we compare three methods for the calculation of resource use efficiency, namely, stochastic frontier analysis (SFA), deterministic parametric programming and nonparametric linear programming. This paper reveals the strengths and weaknesses of these methods for estimating efficiency. Both SFA and linear programming approaches can estimate the efficiency scores. For plants in the dataset the overall geometric mean of the three methods for technical efficiency, environmental efficiency and resource use efficiency is 0.737, 0.335 and 0.248, respectively. The rank correlation coefficient between technical efficiency, environmental efficiency and resource use efficiency is 0.213, 0.617 and 0.877, respectively. The regression analyses of performance across plants shows units in phase I of the SO2 trading programme are negatively related to measures of economic and environmental performance. This suggests that the market for SO2 allowances, per se, may not be minimizing compliance cost. We also find that a decrease in SO2 emission rates not only increases environmental efficiency but also leads to an increase in resource use efficiency. This finding concurs with the hypothesis that enhancement in the environmental performance of a firm leads to an increase in its overall efficiency of resource use as well.Technical efficiency ; Environmental efficiency ; Resource-use efficiency ; Distance functions ; SO2 allowance program

Financial Performance Evaluation: A case study of Awash International Bank S.C

This study was conducted under the title “Financial performance evaluation: a case study of Awash International Bank (AIB) S.C.”. Its main objective was to compare and examine empirically the performance of the first private commercial bank in Ethiopia, i.e. Awash International Bank (AIB) in comparison with industry average with respect to liquidity; profitability; credit risk & solvency and efficiency for the period of 2003-2009. This study was employing ratios (15 in total) such as Return on Asset (ROA), Return on Equity (ROE), Profit Expense Ratio (PER), Return On Deposit (ROD), Net Interest Margin (NIM), Loan to Deposit ratio (LDR), Cash To Deposit Ratio (CDR) Loan to Assets Ratio (LAR), Debt to Equity Ratio (DER), Debt to Total Asset Ratio (DTAR); Equity Multiplier(EM), Nonperforming Loans to Total Loans, Asset Utilization (AU), Income to Expense ratio (IER) and Operating Efficiency(OE). This study found that all results of profitability measures go in favor of industry average. The results indicate that Awash International Bank was less profitable than industry average. However, AIB was consistently improving and performing better in making good returns on investment (assets), satisfying their shareholders in offering competitive or even better returns, making good returns customers’ deposits and also managing their operating expenses over the Years until 2007.From 2007 onwards, profitability of the bank started to decrease. Besides, an overall analysis of all liquidity, efficiency, and risk and solvency measures reveals that AIB was less liquid, efficient in asset utilization, income generation, and managing its expenses and less risky and more solvent than industry average. However, the results also show the AIB is improving overtime considerably in these liquidity, efficiency and risk & solvency measures during the period under the stud

Analysis of Productive Performance of Crop and Animal Production Systems: An Integrated Analytical Framework

This article presents a two-stage analytical framework that integrates ecological crop (animal) growth and economic frontier production models to analyse the productive efficiency of crop (animal) production systems. The ecological crop (animal) growth model estimates "potential" output levels given the genetic characteristics of crops (animals) and the physical conditions of locations where the crops (animals) are grown (reared). The economic frontier production model estimates "best practice" production levels, taking into account economic, institutional and social factors that cause farm and spatial heterogeneity. In the first stage, both ecological crop growth and economic frontier production models are estimated to calculate three measures of productive efficiency: (1) technical efficiency, as the ratio of actual to "best practice" output levels; (2) agronomic efficiency, as the ratio of actual to "potential" output levels; and (3) agro-economic efficiency, as the ratio of "best practice" to "potential" output levels. Also in the first stage, the economic frontier production model identifies factors that determine technical efficiency. In the second stage, agro-economic efficiency is analysed econometrically in relation to economic, institutional and social factors that cause farm and spatial heterogeneity. The proposed framework has several important advantages in comparison with existing proposals. Firstly, it allows the systematic incorporation of all physical, economic, institutional and social factors that cause farm and spatial heterogeneity in analysing the productive performance of crop and animal production systems. Secondly, the location-specific physical factors are not modelled symmetrically as other economic inputs of production. Thirdly, climate change and technological advancements in crop and animal sciences can be modelled in a "forward-looking" manner. Fourthly, knowledge in agronomy and data from experimental studies can be utilised for socio-economic policy analysis. The proposed framework can be easily applied in empirical studies due to the current availability of ecological crop (animal) growth models, farm or secondary data, and econometric software packages. The article highlights several directions of empirical studies that researchers may pursue in the future.agro-economic efficiency, agronomic efficiency, crop growth model, frontier production model, farm heterogeneity, spatial heterogeneity