Banks’ Efficiency and Productivity Analysis Using the Hicks-Moorsteen Approach: A Case Study of Iran

This study is the first to use the Hicks-Moorsteen TFP index developed by O’Donnell (2008,2009, 2010c) to analyse efficiency and productivity changes in the banking system. The advantage of this approach over the popular Malmquist productivity index is that it is free from any assumptions concerning firm optimising behaviour, the structure of markets, or returns to scale. The effects of Iranian government regulations launched in 2005 on the Iranian banking industry are investigated through an analysis of performance over the period 2003-2008 assuming variable returns to scale. The results obtained show that although the Iranian banking industry has been inefficient over the entire period of the study, the industry’s technical efficiency level - which had improved over the period 2003-2006 - deteriorated considerably after the regulatory changes were introduced. The industry experienced its highest negative efficiency growth in 2006 which was 43% and became more mix inefficient after 2005, with a considerably negative productivity change after 2007. Overall, changes of production possibility set and scale efficiency changes exerted dominant effects on productivity changes.Regulation, Productivity, Banking, Data envelopment analysis, Malmquist index,Hicks-Moorsteen index

An evaluation of the world\u27s major airlines\u27 technical and environmental performance

This study is the first to use bootstrapped data envelopment analysis (DEA) models under variable returns to scale in order to examine both the environmental and technical efficiency of airlines. Using the regional classification of the International Air Transport Association (IATA), we chose 48 of the world\u27s major full-service and low-cost carriers from six different regions, and then estimated their performance over the period 2007- 2010. Our empirical results show that many of the most technically efficient airlines are from China and North Asia, while many of the most environmentally efficient airlines are from Europe. We also found that although the number of environmentally oriented full-service airlines is increasing, low-cost carriers are still more environmentally oriented. Our findings also show that almost all the low-cost carriers are technically operating under increasing returns to scale in all the studied years. However, this result was quite the opposite of what we found for the largest airlines

Banks’ efficiency and productivity analysis using the Hicks-Moorsteen approach: a case study of Iran

This study is the first to use the Hicks-Moorsteen TFP index developed by O’Donnell (2008, 2009, 2010c) to analyse efficiency and productivity changes in the banking system. The advantage of this approach over the popular Malmquist productivity index is that it is free from any assumptions concerning firm optimising behaviour, the structure of markets, or returns to scale. The effects of Iranian government regulations launched in 2005 on the Iranian banking industry are investigated through an analysis of performance over the period 2003-2008 assuming variable returns to scale. The results obtained show that although the Iranian banking industry has been inefficient over the entire period of the study, the industry’s technical efficiency level - which had improved over the period 2003-2006 - deteriorated considerably after the regulatory changes were introduced. The industry experienced its highest negative efficiency growth in 2006 which was 43% and became more mix inefficient after 2005, with a considerably negative productivity change after 2007. Overall, changes of production possibility set and scale efficiency changes exerted dominant effects on productivity changes

An Analysis of Productivity Changes in the Iranian Banking Industry: a Bootstrapped Malmquist Approach

This study employs various bootstrapped Malmquist indices and efficiency scores to investigate the effects of government regulation on the performance of the Iranian banking industry over the period 2003-2008. An alternative decomposition of the Malmquist index, introduced by Simar and Wilson (1998a), is also applied to decompose technical changes further into pure technical change and changes in scale efficiency. A combination of these approaches facilitates a robust and comprehensive analysis of Iranian banking industry performance. While this approach is more appropriate than the traditional Malmquist approach, for the case of banking efficiency studies, it has not previously been conducted for any developing country’s banking system. The results obtained show that although, in general, the regulatory changes had different effects on individual banks, the efficiency and productivity of the overall industry declined after regulation. We also find that productivity had positive growth before regulation mainly due to improvements in pure technology, and that government ownership had an adverse impact on the efficiency level of state-owned banks. The bootstrap approach demonstrates that the majority of estimates obtained in this study are statistically significant

Measuring the banking efficiency and productivity changes using the Hicks-Moorsteen approach: the case of Iran

This study is the first to use a comprehensive decomposition of the Hicks–Moorsteen TFP index developed by O’Donnell (2010a) to analyse efficiency and productivity changes in a banking context. The paper investigates the efficiency and productivity growth of the Iranian banking industry between 2003 and 2008, encompassing pre- and post-2005-reform years. The advantage of this approach over the popular constant-returns-to-scale Malmquist productivity index is that it is free from any assumptions concerning firms’ returns to scale. We assume that the production technology exhibits variable returns to scale. Our findings show that the banking industry’s technical efficiency level – which had improved between 2003 and 2006 – deteriorated after regulatory changes were introduced in Iran. The results obtained also show that during 2006–2007, the industry’s total factor productivity increased by 32 per cent. However, the industry experienced its highest negative scale efficiency rate of 38 per cent and its highest negative efficiency growth of 43 per cent during this period. The industry also witnessed a strong drop in productivity in 2007–2008. Overall, our findings show that while government regulations may have resulted in large advances in the production possibilities set and therefore banks’ productivity over time, the state regulatory changes exacerbated the industry’s scale inefficiencies

Analysing Productivity Changes Using the Bootstrapped Malmquist Approach: The Case of the Iranian Banking Industry

This study employs various bootstrapped Malmquist indices and efficiency scores to investigate the effects of government regulation on the performance of the Iranian banking industry over the period 2003-2008. An alternative decomposition of the Malmquist index, introduced by Simar and Wilson (1998a), is also applied to further decompose technical changes into pure technical change and changes in scale efficiency. A combination of these approaches facilitates a robust and comprehensive analysis of Iranian banking industry performance. While this approach is more appropriate than the traditional Malmquist approach for banking efficiency studies, it has not previously been applied to any developing country’s banking system. The results show that although, in general, the regulatory changes had different effects on individual banks, the efficiency and productivity of the overall industry declined after regulation. We also find that productivity had positive growth before regulation, mainly due to improvements in pure technology, and that government ownership had an adverse impact on the efficiency level of state-owned banks. The bootstrap approach demonstrates that the majority of estimates obtained in this study are statistically significant

Bank outreach and performance: evidence from banking efficiency in Sri Lanka

This study evaluates the impact of geographical dispersion of bank branches and their growth on banking sector efficiency in Sri Lanka for the period 2006-2014. Deviating from conventional models used in literature this study employs double-bootstrap semi-parametric truncated regression models based on data envelopment analysis (DEA).Our empirical results show that bank efficiency is not significantly influenced by branch expansion and geographical dispersion in an environment of higher economic growth. This study concludes that a likely decline in bank efficiency with expansion in branch networks, as asserted in the mainstream literature, is not valid when there is a high demand for banking services in line with overall economic growth. Further, this study suggests that geographical dispersion of the banking sector can be used as a policy tool to achieve broad-based and inclusive growth for emerging and rapidly growing economies such as Sri Lanka

Good corporate governance is good for banks\u27 bottom line

Sound corporate governance not only boosts banks\u27 efficiency, it is also good for the profit of Australian banks and their shareholders. However, new research shows that factors such as the number of board meetings, the involvement of large shareholders in boardroom decisions and whether or not the board has independent members don\u27t play a significant role in achieving those goals

On real estate market transparency : the relationship with ICT trade and investment

The relationship between information and communication technology (ICT) investment, ICT trade, and real estate market transparency is examined in this paper. National-level bi-annual data from a sample of advanced and emerging market economies for the period 2004–2018 underpins this work. The regression analyses suggest greater levels of capital investment in ICT and ICT trade are associated with increased transparency in the real estate market. The effect is more pronounced in emerging economies than in advanced ones. Real estate market transparency is also higher in contexts having less restrictions on foreign real estate investment, coupled with corruption controls. These findings also align with existing literature inferring that countries with common law traditions are often more transparent than those from civil law origins