Return to Dollar, Generalized Distance Function and the Fisher Productivity Index

Exploring the duality between a return to dollar definition of profit and the generalized distance function we establish the relationship between the Laspeyres, Paasche and Fisher productivity indexes and their alternative Malmquist indexes counterparts. By proceeding this way, we propose a consistent decomposition of these productivity indexes into two mutually exclusive components. A technical component represented by the Malmquist index and an economical component which can be identified with the contribution that allocative criteria make to productivity change. With regard to the Fisher index, we indicate how researchers can further decompose the Malmquist technical component rendering explicit the sources of productivity change. We also show how the proposed model can be implemented by means of Data Envelopment Analysis techniques, and illustrate the empirical process with an example data set.Generalized Distance Function; Return to Dollar; Fisher and Malmquist Productivity Indexes

Using data envelopment analysis for the efficiency and elasticity evaluation of agricultural farms

Data Envelopment Analysis (DEA) is a well-established relative efficiency measurement technique, which has been widely applied to evaluate the technical efficiency of agricultural units in different countries by focusing on different aspects of agricultural production. This research deals with the evaluation of efficiency through DEA in non-homogeneous agricultural production, where units produce a wide range of different outputs. The objectives are threefold. Firstly, we propose a novel methodological approach of integrating the production trade-offs concept of DEA into non-homogeneous agricultural efficiency evaluation to prevent the overstatement of the efficiency of specialist farms and overcome the issue of insufficient discrimination due to large number of outputs in the models. Secondly, we aim to integrate this methodological perspective to the theory of elasticity measurement on DEA frontiers. The efficient frontiers of DEA are not defined in functional forms as in the classical economic theory, therefore obtaining elasticity measures on them require different considerations. We introduce the production trade-offs to the elasticity measurement and derive the necessary models to calculate the elasticities of response in the presence of production trade-offs. As a third objective, before moving to the introduction of the trade-offs in elasticity measurement, for theoretical completeness, we first consider the elasticity measurement on DEA frontiers of constant returns-to-scale (CRS) technologies. Our proposed methodology and all the developed elasticity theory are illustrated in a real world case of Turkish agricultural sectors. We provide extensive empirical applications covering all the proposed theory and methodology. Among the results of this research, we provide an elasticity measurement framework, which enables us to calculate elasticities of response measures in both VRS and CRS technologies, with or without production tradeoffs included. We observe that the integration of production trade-offs provide better discrimination of efficiency scores compared to the models without trade-offs included. We also investigate how changing production trade-offs affect the efficiency and elasticity measures of the evaluated units

Return to dollar, generalized distance function and the fisher productivity index

Exploring the duality between a return to dollar definition of profit and the generalized distance function we establish the relationship between the Laspeyres, Paasche and Fisher productivity indexes and their alternative Malmquist indexes counterparts. By proceeding this way, we propose a consistent decomposition of these productivity indexes into two mutually exclusive components. A technical component represented by the Malmquist index and an economical component which can be identified with the contribution that allocative criteria make to productivity change. With regard to the Fisher index, we indicate how researchers can further decompose the Malmquist technical component rendering explicit the sources of productivity change. We also show how the proposed model can be implemented by means of Data Envelopment Analysis techniques, and illustrate the empirical process with an example data set

A novel application of data envelopment analysis and production trade-offs for efficiency evaluation of banking institutions : the case for Pakistan

A growing body of empirical literature has attempted to measure the efficiency of banking sector using Data Envelopment Analysis (DEA) by focusing on different aspects of banking services. However, standard DEA models often fail to sufficiently discriminate between efficiency scores of banks particularly with small sample size. Moreover, sometimes knowledge about different banking operations is available that needs to be incorporated in the evaluation method to assess their impact on the performance of banks. This research deals with the efficiency evaluation of banking sector through DEA based on additional information about multiple banking operations without which efficiency is generally overestimated. The main objective of this thesis is to develop a better informed DEA model that is capable of incorporating additional information about different bank specific characteristics by overcoming the problem of poor discrimination. For this purpose, the current study has proposed a novel methodological integration of DEA with production trade-offs in banking context and named it “DEATOB Framework”. This framework is universal in nature and can be applied to banking sectors of other countries. The study also aims to provide the empirical application of DEATOB Framework for which a sample of 29 commercial banks of Pakistan is selected. The results indicate that this framework evaluates banks on the basis of additional characteristics and provides better discrimination between good and bad performers as compared to the standard DEA model. The final objective is to extend the proposed framework to other banking models. For this purpose, the profitability model is chosen considering the profit maximization goal of banks and a separate PDEATOB Framework is developed. An empirical application of this framework is also provided to demonstrate its workability. This thesis also provides an insight on scale efficiency and relationship of efficiency with the banks size and ownership after application of the proposed frameworks

Nigerian Banks' Efficiency Performance- A post 2004 Banking Reforms Evaluation

This study investigated the Nigerian Banks’ Efficiency Performance. The period studied was 2005-2009.In addition to the above, the extent of the effect of the bank’s fixed assets, operating expenses and total deposit on their efficiency was investigated. The effect of the bank’s efficiency on their profitability was also examined. In recent years emphasis is now on using frontier analysis methods in measuring bank efficiency instead of using financial ratios .In frontier analysis, the institutions that perform better relative to a particular standard are separated from those that perform poorly. Such separation is done either by applying a parametric or non parametric frontier analysis to firms within the financial services industry.This study employed the Non parametric Data Envelopment Analysis (DEA)under the assumptions of Constant return to scale (CRS),Variable Return to Scale (VRS) and Scale Efficiency(SE) to estimate the efficiency scores of the banks .A bank with a score of 1 is efficient, while a score below 1 means the bank is inefficient. The tests of the four hypotheses were carried out using Vector autoregressive Analysis (VAR). The findings of the study revealed that GTB was the most efficient bank and it has the least reduction in inputs (4.93%) needed to produce the same amount of output. Moreover it remained efficient throughout the years 2006-2009.Overall, the worst performers are Unity bank, Afribank and UBA. Also the banks did not achieve full efficiency under the CRS, VRS and SE in any of the five years. The findings on the hypothesis tested revealed that fixed assets have a negative relationship with efficiency, operating expenses has no long run relationship with the efficiency variable and total deposit does not affect efficiency. Lastly, efficiency has a positive significant relationship with profitability. This study therefore recommend that the banks that are not efficient should study the operations of GTB the best performer to see if could be adopted to improve their efficiency and the banks should moderate their use of inputs as they could have used fewer amount of inputs to achieve the same level of output. Finally, the acquisition of fixed assets should be reasonable. This is to prevent it from reaching a point where it will impact negatively on the bank’s efficiency

Evaluation and Design of Supply Chain Operations using DEA

Performance evaluation has been one of the most critical components in management. As production systems nowadays consist of a growing number of integrated and interacting processes, the interrelationship and dynamic among processes have create a major challenge in measuring system and process performance. Meanwhile, rapid information obsolescence has become a commonplace in today’s high-velocity environment. Managers therefore need to make process design decisions based on incomplete information regarding the future market. This thesis studies the above problems in the evaluation and design of complex production systems. Based on the widely used Data Envelopment Analysis models, we develop a generalized methodology to evaluate the dynamic efficiency of production networks. Our method evaluates both the supply network and its constituent firms in a systematic way. The evaluation result can help identify inefficiency in the network, which is important information for improving the network performance. Part II of the thesis covers multi-criteria process design methods developed for situations of different information availability. Our design approaches combine interdisciplinary techniques to facilitate efficient decision-making in situations with limited information and high uncertainty. As an illustration, we apply these approaches to project selection and resource allocation problems in a supply chain

Evaluating Data Envelopment Analysis as a means of measuring van fuel efficiency

In order to improve fuel efficiency, fleet managers need methods to accurately measure fuel performance. Miles per gallon – the industry fuel efficiency standard measure – has several limitations. These relate to some aspects of fuel efficiency not reflected in the measure but also to the fact the measure cannot be interpreted without knowing some external factors (such as vehicle weight). This research addresses some of these limitations through the application – within three companies – of a Data Envelopment Analysis (DEA) model to van fuel efficiency measurement. In order to use the fuel information obtained from the fuel cards statements, it was necessary to develop a cleansing and smoothing algorithm which ensured that the data could be safely used in the models. The model results indicate that DEA provided a better and more comparable fuel efficiency measure while effectively addressing some key limitations of the mpg measure. The originality of this research comes from the limited amount of published literature on fuel efficiency measurement in road transport operations. Effectively, only a limited number of papers can be found on the measurement of road operations efficiency using DEA and, with the exception of this study, none could be found on van operations or fuel efficiency measurement. Debriefing discussions confirmed that the fleet operators appreciated the measure and also suggested that more research on fuel theft could be useful. Finally, the recent success of driver competitions seems to indicate there is a latent need in the industry for accurate driver performance measurement, which suggests that methods such as the one developed in this study could be of greater use in the near future.EThOS - Electronic Theses Online ServiceGBUnited Kingdo

A nonparametric approach to productive efficiency measurement : an application of bootstrap DEA to gold mining

In this dissertation the technical efficiency in gold mining is investigated. To the best available knowledge, this is the first such study on gold mining, whether on a localised (one country) or for a cross-section of countries. Since the work by Farrell (1957), much work has been done using nonparametric methods such as DEA. Although extensions in DEA technique, such as bootstrapping have been available for some time, their use has been limited in comparison with the number of overall DEA studies carried out. In this dissertation both DEA and bootstrap DEA are applied to two gold mining cross sectional samples, one on Zimbabwe consisting of thirty-four mines, and the an international one which also included some Zimbabwean mines which comprise fifty-nine observations.The main reason for carrying out the study is an interest in gold mining in general and its importance to Zimbabwe in particular. As will be noted in Chapter 2, the economic development of Zimbabwe has been linked, to a varying extent over the ages, to its growth of the gold mining sector.The results of the dissertation provide some useful insights into the relative performances of gold mines and also some characteristics of the Zimbabwean gold mining sector. The main results indicate that gold mining is characterised mainly by technical efficiency dominating scale efficiency. This is particular relevant when the Zimbabwean mines are compared with their international counterparts. Zimbabwean mines are found to be relatively technically efficient but less so when overall efficiency is considered. In fact they have the lowest overall efficiency scores in the international sample. The results also indicate that mines from the so-called developed mining economies, Australia, Canada, the US and South Africa are the benchmarks in terms of optimal operations. It is mines from these countries which define the overall efficiency frontier.The results of both the samples highlight potential shortcomings in applying DEA and bootstrap extension to gold mining, both for single country and for cross-country cases. Additionally, there are possibilities, with adequate data, of relating country-specific characteristics to differences in overall efficiency among countries.Finally there are indications that including mineralogical factors such as the recovery rate in the production technology has an effect on technical efficiency. Mines with low recovery rates tend to exhibit comparatively higher technical efficiency. The study does have some limitations, mainly because of lack of data. In particular, there were problems in coming with attributing the contribution of capital services to efficiency with the result that a different measure for the flow of capital services is used for each sample. In addition, the two samples are for different time periods. This limits comparative analysis

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