Global crisis, environmental volatility and expansion of the Indian leather industry

Indian leather industry has massive potential for generating employment and achieving high export-oriented growth. However, the on-going global economic slowdown and the wide erratic behaviour of the overall weather condition particularly in the Europe pose both threat (of market loss) and opportunity (to gain some unanticipated demand in the market) before it. On the other hand, its economic performance has not been assessed much till date. The present paper attempts to fill in this gap and makes some suggestions regarding the expansion of the industry by examining technical efficiency (TE) of individual leather producing firms for some selected years since the early-1980s. Analysing the industry’s firm-level data through the Data Envelopment Analysis the paper observes a significant positive association between a firm’s size and its TE, but no such conclusive relation between a firm’s age and TE. It also finds significant variation in TE across firms in different groups of states as well as under different organisational structures. Although, non-availability of panel data does not allow one to assess the trend of the performance of the Indian leather firms properly, the average firm-level TE, however, seems to be on an increasing path, except for downswing in some years. On a totality, analysing the relevant supply side factors the paper proposes the policy makers to go forward in expanding the industry particularly keeping India’s severe unemployment problem, of both skilled as well as unskilled labour forces, in mind. Key Words: Leather industry; Data Envelopment Analysis, Technical Efficiency, Scale Efficiency, Returns to Scale. JEL Classification No: D24, L67, R38

Comparative efficiency of family and corporate farms: does family labour matter?

We examine the comparative efficiency of family relative to corporate farms, using FADN data for the Czech Republic, Hungary, Romania and Spain. We estimate a non-parametric non-separable farm production function, and derive efficiency scores for both family and corporate farms. We decompose efficiency into two distinct sources - organisational differences and management capabilities. We find evidence for organisational efficiency gains from family farming, relative to corporate farming, and these appear to increase with family involvement. However, with regard to the management capabilities, family farms do not compare so favourably. Furthermore, family involvement does not seem to have any systematic effect on the efficiency derived from management capabilities. Our findings suggest that further investigation of the way family farms employ and build management capabilities is needed to substantiate any ‘superiority’ claims

Cost Efficiency in the UK Life Insurance Industry in the Post-Global Financial Crisis Period

The aim of this research project is to adopt a two-stage approach for empirically measuring and determining the level of cost efficiency in the UK Life Insurance industry during and after the Global Financial Crisis (GFC). Stage one employs a Data Envelopment Analysis (DEA) technique with Variable Returns to Scale (VRS) to estimate the cost efficiency scores for the whole UK Life Insurance Industry for the period 2007 to 2015. In the second stage, a panel Tobit regression technique is used to examine the effects on cost efficiency of a set of determinants that are largely drawn from the recent literature on Financial and Risk Management (FRM). The findings suggest that the average cost efficiency in this period was lower than the level previously reported in the literature, but, by 2015, a clear improvement is noted. The findings also suggest that some potentially effective measures to improve operational efficiency include the reduction of the use of reinsurance, increasing firm size and relocation of office space away from Central London

The impact of financial liberalisation on the efficiency of Malaysian banks: an empirical analysis using frontier measurements

The Asian financial crisis in 1997 98 left a severe impact on Malaysia s economy and banking system. This has forced the Malaysian government to undertake financial restructuring initiatives to restore market and public confidence, and to meet the ongoing challenges associated with market structure, financial innovation and globalisation. Therefore, Bank Negara Malaysia (BNM) introduced a ten-year Financial Sector Master Plan (FSMP) to strengthen domestic banks and the regulatory structure, and to promote the banks efficiency by stimulating a competitive banking industry through financial liberalisation. The crisis for banks in Malaysia and the region has been extensively studied in the past (Sufian, 2010). However, empirical studies of the post-crisis period, and the implementation of the FSMP, remain limited. Hence, a data set of all banks in Malaysia, which covers the period 2000 2011, was employed to examine the effect of the FSMP s initiatives on Malaysian banks efficiency between 2000 and 2011. To measure this efficiency, this study employs both parametric and nonparametric models: namely, stochastic frontier analysis (SFA) and data envelopment analysis (DEA). Economic functions such as, cost-, standard profit- and alternative profit-efficiency were used in a 1-stage SFA model, which includes control variables (e.g. capital adequacy, asset quality and liquidity) and environmental variables (e.g. ownership, size, specialisation, deregulation periods and market structure) in the model specifications. In addition, this study employs SFA as the main measurement method, while the DEA model was used to cross-check consistency (Resti, 1997; Bauer et al., 1998). Both SFA and DEA demonstrated that, in most cases, the consistency was moderate. The level of cost efficiency of Malaysian banks worsened over the years 2000 2011, with average cost efficiency during this period was at 76.5%. Despite the various liberalisation measures introduced to the banking industry particularly during the three phases of the FSMP; 2000 2003; 2004 2007; 2008 2011 cost efficiency trended downward, due to the effects of consolidation by domestic banks, deregulation of interest rates, the introduction of foreign Islamic banks, and the global credit crisis. Banks in Malaysia were forced to adjust their inputs and outputs to the rapid changes in the banking industry, which might have made a negative impact on cost efficiency. On the other hand, the banks demonstrated a steadily increasing profit efficiency trend, which fluctuated with the introduction of interest rate liberalisation (early second phase of the FSMP (i.e. 2004)) and during the global credit crisis (early third phase of the FSMP (i.e. 2008)). The average profit efficiency for 2000 2011 was 93.3%. The profit efficiency exhibited an increasing trend in the first (2000-2003) and second (2004-2007) phases of the FSMP, suggesting that the effect of consolidation by domestic banks had resulted in higher market concentration and greater market power among the remaining banks. However, the profit efficiency average scores fell in 2004, 2008 and 2011. This is attributed to the deregulation of interest rates, the deleveraging of the inflow of foreign funds, and the rapid increase in policy interest rates. At a more granular level, domestic banks were found to be more cost efficient, but marginally less profit efficient, when compared to foreign banks. In terms of bank specialisation, conventional banks were more cost- and profit-efficient than Islamic banks. With regard to economies of scale, the majority of Malaysian banks revealed scale economies, illustrated by a U-shape, with medium-sized banks being more scale efficient than small and large banks. These results suggest that, to enhance Malaysian banks efficiency, the government must maintain competitive pressure on the large domestic banks that were consolidated during the first phase of the FSMP (2000-2003). Policymakers may want to further open up banking markets, improve risk management and governance, encourage financial innovation, and support expansion of smaller banks. The implementation of deregulation initiatives during periods of uncertainty (e.g. the global credit crisis) have also resulted in decreasing trend of cost and profit efficiency. Hence, monitoring initiatives, using tools such as frontier measurement is important for regulator s macro- and micro-prudential surveillance

Estimating efficiency and productivity growth of the Grain Silos and Flour Mills Organisation in Saudi Arabia

The Grain Silos and Flour Mills Organisation (GSFMO) is the responsible authority monopolising the Kingdom's milling industry. However, the organisation has recently been facing financial problems. The aim of this study is to estimate the technical, cost and allocative efficiency (TE, CE and AE) of the flour mills of the GSFMO (1988-2011), using Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA) approaches. In addition, it seeks to explain variation in efficiency levels between the mills and conduct further analysis through the second stage regression to estimate the effect of managerial variables. Productivity growth over time was also estimated in this study using DEA (2008-2011) and SFA (1988-2011) approaches. Both primary data and secondary data (1988-2011) to cover the nine milling branches were utilised. Using DEA under constant return to scale (CRS), average TE ranged from 91.72% in Khamis branch to 97.63% in Almadinah. Average TE under input-orientated variable return to scale (VRS) was lower than TE estimated under output-orientated VRS. The older branches had the lowest TE compared to newer branches. Under VRS, TE was greater than TE for the same branches under CRS. TE results using SFA were quite analogous to the results using DEA. Regarding productivity growth, using DEA for the 2008-2011 data, no consistent patterns were found across the GSFMO branches in the mean total factor productivity growth (TFPG), technical change (TC), and efficiency change (EC). When using SFA to estimate productivity growth over the period 1988 to 2011, there was a decrease in productivity growth for most branches. With regards to the results of the second stage regression, branch managers’ age, local temperature and 'bad' infrastructure have a significant negative relationship with TE, while manager's experience did not seem to have any significant relationship with TE. However, new and mix machine conditions and number of mills in each branch have a significant positive relationship with TE. In terms of CE and AE using the DEA approach, the results show that major losses incurred by the organisation were partly due to the significant decrease in CE and AE and that there is a significant scope to reduce inputs costs in the production process

The Influence of Public Service Motivation on Ethical Behaviour and Organizational Performance in Public Administration Sector: Evidence from the Hashemite Kingdom of Jordan

The Hashemite Kingdom of Jordan (HKJ) faces internal and external challenges and hazards that pose significant encounters for HKJ. Such challenges cast a heavy shadow on several public sectors, the most important of which is the public health sector. However, this dissertation aimed to investigate the influence of Public Service Motivation on Ethical behavior and Organizational Performance in Jordanian public hospitals. This dissertation had been divided into two folds that filled numerous flagrant gaps in the arena of PSM. In the first fold, we investigated the influence of PSM on Ethical Behavior using three-level models via SEM. In the second fold, we contribute to the methodological linking between PSM and Organizational Performance using econometrics techniques

Predicting financial distress using corporate efficiency and corporate governance measures

Credit models are essential to control credit risk and accurately predicting bankruptcy and financial distress is even more necessary after the recent global financial crisis. Although accounting and financial information have been the main variables in corporate credit models for decades, academics continue searching for new attributes to model the probability of default. This thesis investigates the use of corporate efficiency and corporate governance measures in standard statistical credit models using cross-sectional and hazard models. Relative efficiency as calculated by Data Envelopment Analysis (DEA) can be used in prediction but most previous literature that has used such variables has failed to follow the assumptions of Variable Returns to Scale and sample homogeneity and hence the efficiency may not be correctly measured. This research has built industry specific models to successfully incorporate DEA efficiency scores for different industries and it is the first to decompose overall Technical Efficiency into Pure Technical Efficiency and Scale Efficiency in the context of modelling financial distress. It has been found that efficiency measures can improve the predictive accuracy and Scale Efficiency is a more important measure of efficiency than others. Furthermore, as no literature has attempted a panel analysis of DEA scores to predict distress, this research has extended the cross sectional analysis to a survival analysis by using Malmquist DEA and discrete hazard models. Results show that dynamic efficiency scores calculated with reference to the global efficiency frontier have the best discriminant power to classify distressed and non-distressed companies. Four groups of corporate governance measures, board composition, ownership structure, management compensation and director and manager characteristics, are incorporated in the hazard models to predict financial distress. It has been found that state control, institutional ownership, salaries to independent directors, the Chair’s age, the CEO’s education, the work location of independent directors and the concurrent position of the CEO have significant associations with the risk of financial distress. The best predictive accuracy is made from the model of governance measures, financial ratios and macroeconomic variables. Policy implications are advised to the regulatory commission

Estimating efficiency and productivity growth of the Grain Silos and Flour Mills Organisation in Saudi Arabia

The Grain Silos and Flour Mills Organisation (GSFMO) is the responsible authority monopolising the Kingdom's milling industry. However, the organisation has recently been facing financial problems. The aim of this study is to estimate the technical, cost and allocative efficiency (TE, CE and AE) of the flour mills of the GSFMO (1988-2011), using Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA) approaches. In addition, it seeks to explain variation in efficiency levels between the mills and conduct further analysis through the second stage regression to estimate the effect of managerial variables. Productivity growth over time was also estimated in this study using DEA (2008-2011) and SFA (1988-2011) approaches. Both primary data and secondary data (1988-2011) to cover the nine milling branches were utilised. Using DEA under constant return to scale (CRS), average TE ranged from 91.72% in Khamis branch to 97.63% in Almadinah. Average TE under input-orientated variable return to scale (VRS) was lower than TE estimated under output-orientated VRS. The older branches had the lowest TE compared to newer branches. Under VRS, TE was greater than TE for the same branches under CRS. TE results using SFA were quite analogous to the results using DEA. Regarding productivity growth, using DEA for the 2008-2011 data, no consistent patterns were found across the GSFMO branches in the mean total factor productivity growth (TFPG), technical change (TC), and efficiency change (EC). When using SFA to estimate productivity growth over the period 1988 to 2011, there was a decrease in productivity growth for most branches. With regards to the results of the second stage regression, branch managers’ age, local temperature and 'bad' infrastructure have a significant negative relationship with TE, while manager's experience did not seem to have any significant relationship with TE. However, new and mix machine conditions and number of mills in each branch have a significant positive relationship with TE. In terms of CE and AE using the DEA approach, the results show that major losses incurred by the organisation were partly due to the significant decrease in CE and AE and that there is a significant scope to reduce inputs costs in the production process