Economic efficiency when prices are not fixed: disentangling quantity and price efficiency

Portela, Maria Conceição A. Silva; Thanassoulis, Emmanuel

doi:10.1016/j.omega.2014.03.005

Cited by 34 publications

(9 citation statements)

References 27 publications

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“…The price used on deposits captures the interest rate paid to depositors which is associated with the cost of deposits[82][83][84]101,102] . However, According to[4] it is neither usual nor desirable for banks to minimize the volume of their deposits in order to minimize their associated costs since they are essential to generate loans.…”

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confidence: 99%

A Nerlovian cost inefficiency two-stage DEA model for modeling banks’ production process: Evidence from the Turkish banking system

Fukuyama

Matoušek

Tzeremes

2020

Omega

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By developing a two-stage model the paper examines the cost inefficiency levels of Turkish banks during the period from 2007 to 2016. Using the notion of Koopmans input efficiency we deconstruct the estimated Nerlovian cost inefficiency to the sum of slack-based allocative and technical inefficiency levels. Alongside the traditional inputs, intermediates and outputs used to model banks' performance measure we additionally use their labor education quality factor as a non-discretionary input. This allows us to model how human capital factors affect a bank's revenue generation stage. Our findings suggest that cost inefficiency levels are driven mainly by a bank's ability to control its allocative inefficiency levels. The empirical evidence also shows that foreign banks perform better, suggesting that bank ownership structures matter when measuring cost performance. Finally, it is evident that the Global Financial Crisis (GFC) had a negative effect on banks' ability to minimize their cost inefficiency levels. However, the post-crisis findings demonstrate that Turkish banks have started to recover from its negative effects, mainly by improving their allocative performance.

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confidence: 99%

A Nerlovian cost inefficiency two-stage DEA model for modeling banks’ production process: Evidence from the Turkish banking system

Fukuyama

Matoušek

Tzeremes

2020

Omega

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“…As noted at the outset, our overarching aim is to assess the efficacy of an institution in salary payments it has made on the prospect of research output by its academic staff. Portela and Thanassoulis (2014) have proposed a general-purpose DEA model for estimating potential cost savings at a production unit when the input levels it uses and the prices it pays per unit of input are optimised simultaneously, to minimise the aggregate cost of inputs, controlling for output levels. Their model provides a useful starting point in addressing the issue of efficacy of the recruitment and promotion policies of an institution, where research by academic staff is concerned.…”

Section: Constructing the Assessment Modelmentioning

confidence: 99%

Assessing the cost-effectiveness of university academic recruitment and promotion policies,

Thanassoulis

Sotiros

Koronakos

et al. 2018

European Journal of Operational Research

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This paper develops an approach for higher education institutions to assess the economic efficiency of their recruitment and promotion practices concerning academic staff. Research output potential is a key criterion in most academic appointments. Generally, there is a long lead time between the conduct of research and its ultimate value in the form of disseminated knowledge. This means higher education institutions usually reward financially staff on the prospect of research output, albeit on the basis of research outputs achieved up to the point of recruitment or discretionary salary rise (e.g. through promotion). We propose a Data Envelopment Analysis (DEA) model which can be used retrospectively to set salary costs against corresponding research outputs achieved as a measure of the financial efficacy of past recruitment and promotion practices. The analysis can identify potential issues with those practices and lead to improvements for the future.

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“…This assumption can be strong in the Spanish banking industry, where recent studies have been analyzing whether market power exists (see, for instance Maudos and Pérez, 2003;Maudos and Fernández de Guevara, 2007;Salas and Saurina, 2003). From the theoretical point of view, in the efficiency literature there are also contributions indicating the problems caused by setting prices in non-fully competitive settings (Camanho and Dyson, 2006;Portela and Thanassoulis, 2014;Portela, 2014;Tone, 2002;Tone and Tsutsui, 2007).…”

Section: The Analytical Frameworkmentioning

confidence: 99%

Earnings Quality and Performance in the Banking Industry: A Profit Frontier Approach.

Tortosa‐Ausina

2014

SSRN Journal

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The analysis of efficiency and productivity in banking has received a great deal of attention for almost three decades now. However, most of the literature to date has not explicitly accounted for risk when measuring efficiency. We propose an analysis of profit efficiency taking into account how the inclusion of a variety of bank risk measures might bias efficiency scores. Our measures of risk are partly inspired by the literature on earnings management and earnings quality, keeping in mind that loan loss provisions, as a generally accepted proxy for risk, can be adjusted to manage earnings and regulatory capital. We also consider some variants of traditional models of profit efficiency where different regimes are stipulated so that financial institutions can be evaluated in different dimensions-i.e., prices, quantities, or prices and quantities simultaneously. We perform this analysis on the Spanish banking industry, whose institutions have been deeply affected by the current international financial crisis, and where re-regulation is taking place. Our results can be explored in multiple dimensions but, in general, they indicate that the impact of earnings management on profit efficiency is of less magnitude than what might a priori be expected, and that on the whole, savings banks have performed less well than commercial banks. However, savings banks are adapting to the new regulatory scenario and rapidly catching up with commercial banks, especially in some dimensions of performance.

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Economic efficiency when prices are not fixed: disentangling quantity and price efficiency

Cited by 34 publications

References 27 publications

A Nerlovian cost inefficiency two-stage DEA model for modeling banks’ production process: Evidence from the Turkish banking system

A Nerlovian cost inefficiency two-stage DEA model for modeling banks’ production process: Evidence from the Turkish banking system

Assessing the cost-effectiveness of university academic recruitment and promotion policies,

Earnings Quality and Performance in the Banking Industry: A Profit Frontier Approach.

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