scholarly journals ASSESSING THE EFFICIENCY OF URBAN CO-OPERATIVE BANKS IN INDIA

2018 ◽  
Vol 2 (1) ◽  
pp. 11
Author(s):  
Swati Raju
Keyword(s):  
Banking Sector ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Balance Sheet ◽  
Efficiency Measurement ◽  
Tobit Regression ◽  
Frontier Analysis ◽  
Super Efficiency ◽  
Parametric Data ◽  
Insight Into

Aim: Urban Co-operative Banks are a small segment albeit significant constituent in the multi-stage credit delivery mechanism of the banking sector in India. These banks have an organisational, managerial and regulatory structure different from commercial banks. It is, therefore, of interest to study the efficiency with which these banks perform their core banking and off balance sheet activities. This paper focuses on the measurement of efficiency in the conduct of core banking and off balance sheet activities for the period 2013-14 to 2015-16. Design / Research methods: The main idea is to employ the parametric Stochastic Frontier Analysis and the non-parametric Data Envelopment Analysis to measure the efficiency of Urban Co-operative Banks. We estimate two models for both the frontier methods, Model A examines the efficiency in core banking activity and Model B for the off balance sheet activities. The analysis of super efficiency undertaken helps identify the most efficient bank while the quartile analysis provides an insight into the distribution of efficiency (for both Models A and B). A Tobit model (for both Models A and B) has also been estimated to identify the determinants of efficiency. Conclusions / findings: We find that Urban Co-operative banks display a higher mean efficiency in core banking activities (Model A) as compared to the off-balance sheet activities (Model B) and this finding has been reiterated by the frequency distribution of efficiency for both the frontier methods. The difference is the mean efficiency obtained for Models A and B is much wider under the stochastic frontier analysis. The analysis of super efficiency points out that of the three banks efficient under Model A and five efficient banks under Model only one bank is common to both the models. The quartile analysis highlights that 38.9 percent of the UCBs are ranked in the lower two quartiles of efficiency. The Tobit regression model has identified deposits and loans disbursed as significant determinants of efficiency for both models. Originality / value of the article: This study contributes significantly to the existent gap in the literature on efficiency measurement of banks in India by focussing on efficiency measurement among urban co-operative banks who play an important role in urban financial inclusion. Implications of the research: This study is the only study that has measured the efficiency in operations of Urban Co-operative Banks and can hence provide an insight into the operations of these banks. It can also help individual banks in taking appropriate measures to improve efficiency.

An Efficiency Analysis of Micro Units in a Fragile Zone: A Panel Study of the Firms in J&K, India

2021 ◽  
pp. 097492922110448
Author(s):  
Javaid Iqbal Khan ◽  
Mehak Majeed ◽  
Saeed Owais Mushtaq
Keyword(s):  
Stochastic Frontier Analysis ◽  
Small And Medium Enterprises ◽  
Panel Study ◽  
Stochastic Frontier ◽  
Negative Relationship ◽  
Jel Classification ◽  
Tobit Regression ◽  
Jammu And Kashmir ◽  
Frontier Analysis ◽  
The Government

The micro, small and medium enterprises (MSMEs) are the backbone of the community development in the developing world. In the fragile and backward regions, it is the micro enterprise that is considered to be the engine of growth and development. Being labour-intensive and requiring lesser capital input, the micro unit start-ups demand lesser investment in plant and machinery, attracting more and more potential entrepreneurs. Over the time, such units gain experience and knowledge becoming more efficient. This article studies the firms located in the fragile and geographically remote region of Jammu and Kashmir. The article uses a panel of 15 years from 2002 to 2016 based on the Annual Survey of Industries data. Using the Stochastic Frontier Analysis, the article studies the MSMEs and the micro units. From the post-estimation, technical efficiency scores are attained for both MSMEs and the micro units. The results reveal that the micro units are more efficient than the MSMEs in general. Tobit regression is used to estimate the technical inefficiency model to determine the factors that contribute to the inefficiency present in the micro units. The results show that there is a negative relationship between the efficiency of the micro unit firms and the asset-liability ratio and the loan-liability ratio, while there is a positive relationship between the private ownership of the firm and the efficiency level. Age of the firm is considered separately to validate the ‘learning theory’ by Jovanovic. The article concludes by suggesting that the government must provide adequate boost and a big-push to the micro units in order to eradicate the widespread unemployment and fragility in the region. JEL Classification: F61, L25

scholarly journals PANEL STOCHASTIC FRONTIER ANALYSIS OF PROFITABILITY AND EFFICIENCY OF TURKISH BANKING SECTOR IN THE POST CRISIS ERA / TURKIJOS BANKŲ SEKTORIAUS VEIKLOS PELNINGUMO IR EFEKTYVUMO ANALIZĖ POKRIZINIU LAIKOTARPIU

2011 ◽  
Vol 12 (4) ◽  
pp. 629-654 ◽  
Author(s):  
Ahmet Faruk Aysan ◽  
Mustafa Mete Karakaya ◽  
Metin Uyanik
Keyword(s):  
Structural Changes ◽  
Banking Sector ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Foreign Banks ◽  
Efficiency Gain ◽  
Stochastic Frontier Approach ◽  
Banking Efficiency ◽  
Frontier Analysis ◽  
Efficiency Measures

This paper examines the efficiency and its relation to profitability in Turkish banking sector by employing Panel Stochastic Frontier Approach. In the post crises period, extensive structural changes have taken place and a great number of new developments have occurred, affecting the efficiency of banking sector. This is the first study that employs panel stochastic frontier approach for banking efficiency in Turkey. In this research, both cost and profit efficiency measures are estimated for the panel data consisting of 32 banks between 2002–2007. Results suggest that there is cost efficiency gain and convergence in the efficiency levels of banks. As another interesting result, foreign banks are less efficient and state banks are more efficient. This paper also analyzes the relation between efficiency and profitability and finds no robust relation between them. However, the bank size matters more for profitability. Santrauka Autoriai nagrinėja Turkijos bankų veiklą, t. y. jų pelningumą bei efektyvumą pokriziniu laikotarpiu. Šis laikotarpis buvo pasirinktas todėl, kad atsirado daug įvairių struktūrinių pokyčių, kurie turėjo įtakos bankininkystės sektoriaus efektyvumui. Tyrimui buvo pasirinkti 32 Turkijoje veikiantys bankai (jų veiklos rodikliai prieš ekonominę krizę ir po jos). Rezultatai rodo, kad Turkijoje veikiančių užsienio komercinių bankų veikla yra mažiau efektyvesnė nei valstybinių. Taip pat autoriai analizuoja bankų veiklos efektyvumo ir pelningumo santykį, tačiau, kaip rodo gauti rezultatai, stipraus ryšio tarp jų nėra.

scholarly journals THE EFFECTS OF COMPETITION ON EFFICIENCY: THE VIETNAMESE BANKING INDUSTRY EXPERIENCE

2017 ◽  
pp. 1-30 ◽  
Author(s):  
THANH PHAM THIEN NGUYEN ◽  
SON HONG NGHIEM
Keyword(s):  
Cost Efficiency ◽  
Banking Sector ◽  
Stochastic Frontier Analysis ◽  
Global Financial Crisis ◽  
Stochastic Frontier ◽  
Bank Efficiency ◽  
Frontier Analysis ◽  
The Cost ◽  
Efficiency Effects ◽  
Industry Experience

Given considerable changes in the Vietnamese banking environment brought about by significant reforms towards liberalization during the last two decades, this study investigates the evolution of competition and efficiency, compares the competition and efficiency of state-owned banks to joint-stock banks, and then tests the “quiet life” hypothesis in this industry over the period 2000–2014. This study employs the efficiency-adjusted Lerner index (i.e., market power) to capture competition, and the cost efficiency estimated by a Fourier-flexible function stochastic frontier analysis (SFA) to capture bank efficiency. This study firstly finds a slight improvement of competition and cost efficiency in the Vietnamese banking sector over the analysis period. Secondly, there are no significant differences in competition and cost efficiency level between state-owned and joint-stock banks. Thirdly, a positive causality running from competition to cost efficiency is documented, providing evidence of supporting the “quiet life” hypothesis. Finally, positive efficiency effects of the banks’ capital ratio and size are found, while insignificant impacts of the growth of GDP per capita and 2007 global financial crisis were observed. The results are strongly robust to a variety of tests. The findings suggest pro-competition, pro-capitalization and pro-size expansion policies in the Vietnamese banking sector if targeting at improving the cost efficiency of Vietnamese banks.

scholarly journals Farm Structure And Efficiency In The Hungarian Agriculture

2015 ◽  
Vol 4 (2) ◽  
pp. 51-56
Author(s):  
Orsolya Tóth ◽  
István Takács
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Farm Size ◽  
Empirical Literature ◽  
Data Envelopment ◽  
Frontier Analysis ◽  
Parametric Data ◽  
Legal Forms ◽  
On Farm

Abstract It has long been the subject of empirical researches to examine the technical efficiency on farm (micro) level. Two main methods are most often used in the empirical literature: the non-parametric Data Envelopment Analysis (DEA) based on linear programming, and the Stochastic Frontier Analysis (SFA) introduced by Aigner, Lovell and Schmidt (1977). The present study aimed to investigate the technical efficiency of farms involved in agricultural activities in Hungary using the DEA-method and the data from the Hungarian FADN database. The technical efficiency was examined based on legal forms, farm size categories and the type of farming between 2001 and 2013.

scholarly journals Efficiency in Vietnamese Banking: A Meta-Regression Analysis Approach

2021 ◽  
Vol 9 (3) ◽  
pp. 41
Author(s):  
Tin H. Ho ◽  
Dat T. Nguyen ◽  
Thanh Ngo ◽  
Tu D. Q. Le
Keyword(s):  
Regression Analysis ◽  
Banking Sector ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Data Envelopment ◽  
Truncated Regression ◽  
Frontier Analysis ◽  
Meta Regression ◽  
Meta Regression Analysis ◽  
Frontier Efficiency

This study explains the differences and variances in the efficiency scores of the Vietnamese banking sector retrieved from 27 studies published in refereed academic journals under the framework of meta-regression analysis. These scores are mainly based on frontier efficiency measurements, which essentially are Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA) for Vietnamese banks over the period of 2007–2019. The meta-regression is estimated by using truncated regression to obtain bias-corrected scores. Our findings suggest that only the year of publication is positively correlated with efficiency, whilst the opposite is true for the data type, and sample size.

Technical Efficiency Through Innovative Methods and Estimations in Financial Markets

2021 ◽  
pp. 55-70
Author(s):  
Aikaterini Kokkinou
Keyword(s):  
Financial Markets ◽  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Productive Efficiency ◽  
Data Envelopment ◽  
Frontier Analysis ◽  
Parametric Data ◽  
Efficiency Estimation ◽  
Non Parametric

This paper investigates technical efficiency estimation in financial markets, using both parametric and non-parametric techniques: parametric Stochastic Frontier Analysis (SFA) approach or non-parametric Data Envelopment Analysis (DEA). This chapter focuses on reviewing the stochastic frontier analysis literature regarding estimating inefficiency in financial markets level, as well as explaining producer heterogeneity along with the relationships with productive efficiency level. This chapter investigates technical efficiency estimation in financial markets, using both parametric and non-parametric techniques: parametric Stochastic Frontier Analysis (SFA) approach or non-parametric Data Envelopment Analysis (DEA). More specifically, this chapter focuses on reviewing the stochastic frontier analysis literature regarding estimating inefficiency, its industrial level, as well as explaining producer heterogeneity along with the relationships with productive efficiency level.

scholarly journals Using Environmental, Social, Governance (ESG) and Financial Indicators to Measure Bank Cost Efficiency in Asia

2021 ◽  
Vol 13 (20) ◽  
pp. 11139
Author(s):  
Hai-Yen Chang ◽  
Lien-Wen Liang ◽  
Yu-Luan Liu
Keyword(s):  
Cost Efficiency ◽  
Banking Sector ◽  
Stochastic Frontier Analysis ◽  
Developing Economies ◽  
Stochastic Frontier ◽  
Financial Indicators ◽  
Frontier Analysis ◽  
Asian Economies ◽  
Cost Efficient ◽  
The Impact

Environmental, social, and governance (ESG) practices have been used as non-financial indicators to measure bank performance worldwide in the last decade. The United Nations (UN) has specified 17 Sustainable Development Goals (SDGs) for the implementation of these ESG concepts. However, it remains unclear whether the costs of ESG have exceeded the benefits. The purpose of this study is to examine the impact of ESG on the cost efficiency of developed and developing Asian banks using a two-step approach comprising stochastic frontier analysis (SFA) and stochastic metafrontier analysis (SMF). The data sample from 2015 to 2018 is separated into two groups: 60 Asian developed economies and 85 developing economies. The results show that banks in the developed Asian economies become more cost-efficient through environmentally friendly activities. The banks in the developing Asian economies increase their cost efficiency by socially responsible activities and improved governance. Moreover, banks in the developed Asian economies outperformed those in the developing Asian economies in terms of technology gap ratio (TGR) and metafrontier cost efficiency (MCE). The results of this study benefit not only investors and bank managers but also the entire banking sector and the world economy.

scholarly journals Sensitivity of technical efficiency estimates to estimation methods: an empirical comparison of parametric and non-parametric approaches

2014 ◽  
Vol 8 (1) ◽  
pp. 67-72 ◽  
Author(s):  
Henry de-Graft Acquah
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Ordinary Least Squares ◽  
Estimation Methods ◽  
Strong Positive Correlation ◽  
Production Frontier ◽  
Frontier Analysis ◽  
Parametric Data ◽  
Non Parametric

This paper highlights the sensitivity of technical efficiency estimates to estimation approaches using empirical data. Firm specific technical efficiency and mean technical efficiency are estimated using the non parametric Data Envelope Analysis (DEA) and the parametric Corrected Ordinary Least Squares (COLS) and Stochastic Frontier Analysis (SFA) approaches. Mean technical efficiency is found to be sensitive to the choice of estimation technique. Analysis of variance and Tukey’s test suggests significant differences in means between efficiency scores from different methods. In general the DEA and SFA frontiers resulted in higher mean technical efficiency estimates than the COLS production frontier. The efficiency estimates of the DEA have the smallest variability when compared with the SFA and COLS. There exists a strong positive correlation between the efficiency estimates based on the three methods.  

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