A non-parametric framework for evaluating governance–efficiency–productivity associations in commercial banking

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Navendu Prakash ◽  
Shveta Singh ◽  
Seema Sharma
Keyword(s):  
Cost Efficiency ◽  
Generalized Method Of Moments ◽  
Equity Capital ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Risk Governance ◽  
Regulatory Capital ◽  
Governance Mechanisms ◽  
Content Type ◽  
Efficiency And Productivity

PurposeAgainst the backdrop of an Indian banking sector that finds itself entangled in the triple deadlock of increasing competition, technological changes and strict regulatory compliance, the study aims to examine the need for reinforcing stringent corporate and risk governance mechanisms as an instrument for improving efficiency and productivity levels.Design/methodology/approachThe authors construct three separate indices, namely, supervisory board index, audit index and risk governance index to measure the governance practices of commercial banks. A slacks-based data envelopment analysis technical efficiency (TE) measure, a variable returns to scale cost efficiency model and Malmquist productivity index are employed to determine TE, cost efficiency and productivity change, respectively. A two-step system-generalized method of moments estimation accounts for the dynamic relationship between governance and efficiency.FindingsThe authors show that strict audit and risk governance mechanisms are associated with better efficiency and productivity levels. However, consistent with the free-rider hypothesis, large, independent and diverse boards lead to cost inefficiencies. Strict risk governance structures circumvent the negative effects of high regulatory capital and improve efficiency and total factor productivity. However, friendly boards do not perform efficiently in the presence of regulatory capital, implying that incentives arising from maintaining high levels of equity capital make them more susceptible to risk-taking, and board composition is unable to sidestep this behaviour.Originality/valueThe paper contributes to the literature that explores the linkages between governance, efficiency and productivity. The inferences hold relevance in the post-COVID world, as regulators try to circumvent the additional stress on the banking system by adopting sound corporate and risk governance mechanisms.

Effects of cross-border acquisitions on efficiency and productivity of acquired companies: evidence from cement industry

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Slađana Savović ◽  
Predrag Mimović
Keyword(s):  
Data Envelopment Analysis ◽  
Transitional Economies ◽  
Cement Industry ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Data Envelopment ◽  
Content Type ◽  
Cross Border ◽  
Efficiency And Productivity ◽  
Practical Implications

PurposeThe purpose of this paper is to explore the effects of cross-border acquisitions on the efficiency and productivity of acquired companies in the cement industry in the context of a transitional economy.Design/methodology/approachThe Data Envelopment Analysis (DEA) and Malmquist Productivity Index were used to assess the efficiency and productivity of the acquired companies over the period 2000–2018. DEA and Malmquist index are combined with bootstrapping to perform succinct statistical inferences for determining the accuracy of results. The study assesses partial efficiency and productivity of three inputs: material, capital and labour, as well as the total factor efficiency and productivity of the acquired companies in the short and long term after the acquisitions.FindingsThe research results suggest that efficiency of material, efficiency of labour and the total factor efficiency of the acquired companies are higher after the acquisitions than before, while efficiency of capital is lower. In addition, the results show that the acquisitions had a positive impact on total factor productivity of the acquired companies.Practical implicationsThe results of this study have practical implications for managers, especially for policy-makers and industry analysts in deciding whether to encourage or discourage cross-border acquisitions in transitional economies.Originality/valueThe study contributes to a better understanding of the impact of cross-border acquisitions on efficiency and productivity of acquired companies in the manufacturing industry. Research in transitional economies related to subject matter is limited, and this study is the first empirical investigation of the effect of cross-border acquisitions on the efficiency and productivity in the cement industry in Serbia by applying the Data Envelopment Analysis.

Efficiency and productivity performance of zakat funds in Algeria

2018 ◽  
Vol 11 (3) ◽  
pp. 474-494 ◽  
Author(s):  
Chams-Eddine Djaghballou ◽  
Mohamed Djaghballou ◽  
Mousa Larbani ◽  
Azhar Mohamad
Keyword(s):  
Design Methodology ◽  
Operating Performance ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Scale Efficiency ◽  
Data Envelopment ◽  
Efficiency Change ◽  
Output Data ◽  
Content Type ◽  
Efficiency And Productivity

Purpose The purpose of this study is to examine the efficiency and productivity performance of zakat funds managed by Directorates of Religious Affairs and Endowments (DRAE) in Algeria. Design/methodology/approach In this study, the authors employ data envelopment analysis and measure Malmquist Productivity Index for DRAE’s input and output data spanning from 2003 to 2013. Findings The authors find that total factor productivity has increased sharply for all zakat funds, mainly due to a technical rather than efficiency change. Further decomposition of the efficiency change into its pure technical and scale efficiency components suggests that the pure efficiency is a more important source of efficiency change than the scale efficiency component, meaning that zakat funds rely on technical aspects to gain efficiency. Originality/value The findings of this study are expected to contribute considerably to the existing knowledge on the operating performance of zakat funds in Algeria.

Impact of merger on efficiency and productivity : a case study of commercial banks in Malaysia

1970 ◽  
Vol 5 (1) ◽  
pp. 77
Author(s):  
Mahadzir Ismail ◽  
Saliza Sulaiman ◽  
Hasni Abdul Rahim ◽  
Nordiana Nordin
Keyword(s):  
Efficiency Score ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Data Envelopment ◽  
Master Plan ◽  
Before And After ◽  
Domestic Banks ◽  
The Impact ◽  
Efficiency And Productivity

The Financial Master Plan (2001- 2010) aims to enhance the capacity of banking industry so that higher effic iency and productivity can be reaped in the future. This study seeks to determine the impact of merger on the efficiency and productivity ofcommercial banks in Malaysia for the period 1995 until 2005. The study uses a non-parametric approach, nam ely DEA (data envelopment analysis?) to estimate the efficiency scores and to construct the Malmquist productivity index. To enable this estimation, three bank inputs and outputs are used. Amongst the findings are those banks exhibit higher efficiency score after the merger and thefo reign banks are more efficient than the local banks. Productivity of the banks is calculated in both periods, before and after the merger: The results show that, it is the local banks that have improved the most after the merger. The main source of productivity is technical change or innovation. The findings support the existing policy of having larger domestic banks in term of size.

scholarly journals Dual Efficiency and Productivity Analysis of Renewable Energy Alternatives of OECD Countries

2021 ◽  
Vol 13 (13) ◽  
pp. 7401
Author(s):  
Sedef E. Kara ◽  
Mustapha D. Ibrahim ◽  
Sahand Daneshvar
Keyword(s):  
Renewable Energy ◽  
Solar Energy ◽  
Wind Energy ◽  
Oecd Countries ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Scale Efficiency ◽  
Productivity Analysis ◽  
Average Efficiency ◽  
Efficiency And Productivity

This paper examines the dual efficiency of bioenergy, renewable hydro energy, solar energy, wind energy, and geothermal energy for selected OECD countries through an integrated model with energy, economic, environmental, and social dimensions. Two questions are explored: Which renewable energy alternative is more dual efficient and productive? Which renewable energy alternative is best for a particular country? Data envelopment analysis (DEA) is used for the efficiency evaluation, and the global Malmquist productivity index is applied for productivity analysis. Results indicate bioenergy as the most efficient renewable energy alternative with a 20% increase in average efficiency in 2016 compared to 2012. Renewable hydro energy, wind energy, and solar energy show a 17.5%, 16%, and 11% increase, respectively. The average efficiency growth across all renewable energy alternatives signifies major advancement. Country performance in renewable energy is non-monolithic; therefore, they should customize their renewable energy portfolio accordingly to their strengths to enhance renewable energy efficiency. Renewable hydro appears to have the most positive productivity change in 2016 compared to 2012, while solar energy regressed in productivity due to its scale inefficiency. All renewable energy alternatives have relatively equal average pure efficiency change. The positive trend in efficiency and productivity provides an incentive for policy makers to pursue further development of renewable energy technologies with a focus on improving scale efficiency.

Contemporaneous or causal? Evaluating the triumvirate of insolvency risk, capitalization and efficiency in Indian commercial banking

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Navendu Prakash ◽  
Shveta Singh ◽  
Seema Sharma
Keyword(s):  
Cost Efficiency ◽  
Banking Sector ◽  
Generalized Method Of Moments ◽  
Commercial Banking ◽  
Seemingly Unrelated Regression ◽  
Bank Capital ◽  
Short Term ◽  
Content Type ◽  
Insolvency Risk

PurposeThis paper empirically examines the short-term and long-term associations between risk, capital and efficiency (R-C-E) in the Indian banking sector across 2008–2019 to answer the presence of causation or contemporaneousness in the R-C-E nexus.Design/methodology/approachThe paper focuses on three objectives. First, the authors determine short-term causality in the risk–efficiency relationship by studying the simultaneous influence of a wide array of banking risks on DEA-based technical and cost efficiency in static and dynamic situations. Second, the authors introduce bank capital and contemporaneously determine the interplay between R-C-E using seemingly unrelated regression equation (SURE) and three-staged least squares (3SLS). Last, the authors assess stability in inter-temporal associations using Granger causality in an autoregressive distributed lag (ARDL) generalized method of moments (GMM) framework.FindingsThe authors contend that high capital buffers reduce insolvency risk and increase bank stability. Technically efficient banks carry lesser equity buffers, suggesting a trade-off between capital and efficiency. However, capitalization makes banks more technically efficient but not cost-efficient, implying that over-capitalization creates cost inefficiencies, which, in line with the cost skimping hypothesis, forces banks to undertake risk. Concerning causal relationships, the authors conclude that inefficiency Granger-causes insolvency and increases bank risk. Further, steady increases in capital precede technical and cost efficiency improvements. The converse also holds as more efficient banks depict temporal increases in capitalization levels.Originality/valueThe paper is perhaps the first that acknowledges the influence of the “time” perspective on the R-C-E nexus in an emerging economy and advocates that prudential regulations must focus on short-term and long-term intricacies among the triumvirate to foster a stable banking environment.

scholarly journals An Efficiency and Productivity of Zakat Institution in Malaysia and Indonesia: The Comparative Study

2019 ◽  
pp. 243-257
Author(s):  
Aas Nurasyiah ◽  
Risa Sari Pertiwi ◽  
Faqih Adam
Keyword(s):  
Role Model ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Data Envelopment ◽  
Fourth Quadrant ◽  
High Efficient ◽  
Using Data ◽  
The Comparative Study ◽  
Standardization Policy ◽  
Efficiency And Productivity

The efficiency and productivity of Zakat institution have widely discussed, it is an organization based on social which looks after economic disparities. Most recently, Indonesia made a standardization policy and system of zakat institution, so that the zakat institution in Indonesia can reach the same quality or higher rather than other countries. It called Zakat Core Principles. Therefore, this research will focus on the zakat institution in Indonesia and Malaysia. The purpose of this study is to measure and compare the efficiency and productivity using Data Envelopment Analysis (DEA) and Malmquist Productivity Index (MPI), which is a non-parametric and deterministic methodology for determining the relative efficiency and productivity. The result of this research shows, The first quadrant is the best efficient and productive institutions gained by zakat institution in Indonesia namely Sinergi Foundation and 3 zakat institutions in Malaysia namely Kedah, Melayu Perak, and Selangor. The second quadrant is highly productive but low efficient achieved by zakat institutions in Indonesia namely Baznas, RZ, Dompet Dhuafa and 1 zakat institution in Malaysia namely Jawhar. The third quadrant is high efficient but low productive didn’t achieve by any zakat institution in Indonesia or Malaysia. The fourth quadrant is low efficient and low productive reached by 1 zakat institution in Indonesia namely PKPU and 3 zakat institution in Malaysia namely Kelantan, PPZ and Pahang. The implication in this study is describing the position of zakat institution in Indonesia and Malaysia so that it is known which zakat institution could be a role model or benchmarking for other zakat institution.  

Robust malmquist productivity measurement: evidence from Spanish hotel industry during the Great Recession

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nickolaos G. Tzeremes
Keyword(s):  
Great Recession ◽  
Hotel Industry ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Productivity Change ◽  
Productivity Measurement ◽  
Content Type ◽  
Crisis Period ◽  
The Great Recession ◽  
Robust Version

PurposeThe purpose of this paper is to provide a robust version of the Malmquist Productivity Index (MPI) in order to evaluate hotels' productivity levels during the Great Recession.Design/methodology/approachBased on the order-m frontiers, we apply a robust version of an MPI. We decompose the productivity into three robust components. We use a sample of hotels operating in the Balearic Islands and Canary Islands, and we decompose and evaluate their productivity levels during the period 2004–2013. Moreover, we evaluate hotels' productivity performance during the pre-crisis period, the US subprime crisis period, the global financial crisis (GFC), the sovereign debt crisis period and the after-crisis period.FindingsOur findings show that productivity did not deteriorate due to the adverse effects of economic crisis. This is mainly driven by increased technical change and the ability to operate at optimal scales. The long-term investment in innovation policies which are related to services and processes, appear to be the dominating feature behind hotels' productivity levels, which helped the hotel industry to recover quickly from the Great Recession.Originality/valueThe vast majority of empirical studies evaluating the productivity change in the hotel industry apply MPIs which are based on data envelopment analysis (DEA). However, the productivity measurement which is based on the nonparametric framework is sensitive to sample characteristics. In order to avoid such shortcomings, we apply a robust version of the MPI.

Dynamic and static analysis of agricultural productivity in China

2018 ◽  
Vol 10 (2) ◽  
pp. 293-312 ◽  
Author(s):  
Panpan Diao ◽  
Zhonggen Zhang ◽  
Zhenyong Jin
Keyword(s):  
Agricultural Production ◽  
Agricultural Productivity ◽  
Policy Implications ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Scale Efficiency ◽  
Western Region ◽  
Content Type ◽  
Tfp Growth ◽  
The Western Region

Purpose The purpose of this paper is to analyze agricultural total factor productivity (TFP) and input redundancies in different regions of China, and to bring out the policy implications for improving efficiency in agricultural production as well as environment protection. Design/methodology/approach Based on the provincial panel data during 1995-2014, the agricultural productivity of China and its regional disparity are analyzed. First, the agricultural TFP and its decomposition are dynamically evaluated by means of data envelopment analysis-Malmquist productivity index. Second, the agricultural radial production efficiency in year 2014 and the input redundancy changes from 1995 to 2014 are measured based on the BCC-slacks-based measure model. Findings The results showed that the overall agricultural TFP of China grew 4.3 percent annually during 1995-2014, mainly as a result of technical progress. However, the declines of technical efficiency and scale efficiency slowed down the agricultural TFP growth. The TFP growth in the Western region and Central region far exceeded the Eastern region in last few years. In 2014, most effective decision-making units were in the Western region. The input redundancies in the agricultural production increased substantially after 2006, especially for the pesticide use amount, reservoir capacity and agricultural machinery power. Originality/value Combining the dynamic and static analyses, the paper fulfilled the study of China’s agricultural productivity and the input redundancies in recent years, and also presented the regional disparities.

scholarly journals A novel artificial intelligent approach: comparison of machine learning tools and algorithms based on optimization DEA Malmquist productivity index for eco-efficiency evaluation

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mirpouya Mirmozaffari ◽  
Elham Shadkam ◽  
Seyyed Mohammad Khalili ◽  
Kamyar Kabirifar ◽  
Reza Yazdani ◽  
...  
Keyword(s):  
Machine Learning ◽  
Data Mining ◽  
Additive Model ◽  
Machine Learning Algorithms ◽  
Single Stage ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Undesirable Outputs ◽  
Stage Model ◽  
Content Type

Purpose Cement as one of the major components of construction activities, releases a tremendous amount of carbon dioxide (CO2) into the atmosphere, resulting in adverse environmental impacts and high energy consumption. Increasing demand for CO2 consumption has urged construction companies and decision-makers to consider ecological efficiency affected by CO2 consumption. Therefore, this paper aims to develop a method capable of analyzing and assessing the eco-efficiency determining factor in Iran’s 22 local cement companies over 2015–2019. Design/methodology/approach This research uses two well-known artificial intelligence approaches, namely, optimization data envelopment analysis (DEA) and machine learning algorithms at the first and second steps, respectively, to fulfill the research aim. Meanwhile, to find the superior model, the CCR model, BBC model and additive DEA models to measure the efficiency of decision processes are used. A proportional decreasing or increasing of inputs/outputs is the main concern in measuring efficiency which neglect slacks, and hence, is a critical limitation of radial models. Thus, the additive model by considering desirable and undesirable outputs, as a well-known DEA non-proportional and non-radial model, is used to solve the problem. Additive models measure efficiency via slack variables. Considering both input-oriented and output-oriented is one of the main advantages of the additive model. Findings After applying the proposed model, the Malmquist productivity index is computed to evaluate the productivity of companies over 2015–2019. Although DEA is an appreciated method for evaluating, it fails to extract unknown information. Thus, machine learning algorithms play an important role in this step. Association rules are used to extract hidden rules and to introduce the three strongest rules. Finally, three data mining classification algorithms in three different tools have been applied to introduce the superior algorithm and tool. A new converting two-stage to single-stage model is proposed to obtain the eco-efficiency of the whole system. This model is proposed to fix the efficiency of a two-stage process and prevent the dependency on various weights. Converting undesirable outputs and desirable inputs to final desirable inputs in a single-stage model to minimize inputs, as well as turning desirable outputs to final desirable outputs in the single-stage model to maximize outputs to have a positive effect on the efficiency of the whole process. Originality/value The performance of the proposed approach provides us with a chance to recognize pattern recognition of the whole, combining DEA and data mining techniques during the selected period (five years from 2015 to 2019). Meanwhile, the cement industry is one of the foremost manufacturers of naturally harmful material using an undesirable by-product; specific stress is given to that pollution control investment or undesirable output while evaluating energy use efficiency. The significant concentration of the study is to respond to five preliminary questions.

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