Profit efficiency of banks in Colombia with undesirable output: a directional distance function approach

Almanza, Camilo; Rodríguez, Jhon James Mora

doi:10.5018/economics-ejournal.ja.2018-30

Cited by 6 publications

(5 citation statements)

References 41 publications

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“…Our results are in line with previous findings that found countries with a high level of CO 2 emissions are less eco-energy efficient than those who have low environmental impact production behavior (Tachega et al, 2021;Bampatsou et al, 2013;Wang et al, 2013). Other findings outside the energy area also confirmed that efficiency models that ignore undesirable outputs tend to overestimate the inefficiency scores (Almanza et al, 2018;Liu et al, 2020). Therefore, in that follows, we interpret only the results obtained from model 2.…”

Section: Energy and Eco-energy Efficiency Scoressupporting

confidence: 92%

Africa Countries’ Energy Efficiency: Evidence from a Directional Distance Function Approach

Alinsato¹,

Bassongui²,

Alakonon³

2021

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Section: Energy and Eco-energy Efficiency Scoressupporting

confidence: 92%

Africa Countries’ Energy Efficiency: Evidence from a Directional Distance Function Approach

Alinsato¹,

Bassongui²,

Alakonon³

2021

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“…The same for private banks was found to be underestimated by 0.2 percent and 0.7 percent. Our findings are similar to those of a previous study concluding that nonconsideration of NPAs could overestimate the inefficiency measurements and underestimate the efficiency of the decision-making unit 48 . Further, the impact is more on public sector banks which clearly endorses the view that the problem of NPAs is worse for public sector banks due to mounting NPAs in their case.…”

Section: Findings and Analysissupporting

confidence: 91%

Impact of Non-Performing Assets over Bootstrapped Efficiency of Banks: Analysis of Indian Domestic Banks

Rawat,

Sharma

2023

JBT

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The present paper examines the possible impact of Non-Performing Assets (NPAs) on the efficiency estimates of banks. The bootstrapped efficiency scores of 44 domestic banks of India have been examined over a period of 12 years from 2010–11 to 2021–22. The results indicate that public-sector banks performed well in the efficiency aspect as compared to private-sector banks. The Wilcoxon signed-rank test discerned that there is a significant impact of NPAs over the efficiency estimates. The results divulge that non-consideration of NPAs leads to underestimation of the efficiency of banks. The results are expected to be fruitful for policymakers, regulators, banks, and researchers. The inference is very crucial for researchers as well as regulators while comparing the efficiency of public and private sector banks because public sector banks seriously suffer from the problem of mounting NPAs. The comparison of efficiency scores in different years unveils the strong relationship of efficiency estimates with money deposited into banks and the amount lent by banks. The outcomes of the study hold significant potential for policymakers, regulators, and banks alike, as they seek to get a comprehensive understanding of the intricate dynamics surrounding lending, deposits, and the overall efficiency of banking institutions. Further, since the impact of not including NPAs was found to be worse on managerial efficiency, the managers have to make rational use of banking inputs in order to maximise outputs. The study is likely to be a useful reference for researchers interested in researching various aspects of efficiency.

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“…Findings suggest modest risk preference as most suitable for the progress of Chinese banking. Almanza and Rodríguez (2018) proved the importance of including undesirable output into the production model by confirming the significant difference between models when NPL is not considered. Partovi and Matousek (2019) analysed the performance of Turkish banks for the period of 2002 to 2017 by focusing on NPLs as undesirable output.…”

Section: Literature Reviewmentioning

confidence: 82%

Operational Performance Modelling of Indian Banks: A Data Envelopment Analysis Approach

Preeti,

Roy

2022

Paradigm: A Management Research Journal

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The rising level of non-performing loans (NPLs) posits risk on the operational working of the banking sector. The study focuses on developing an operational performance model for banks by considering the NPLs. The study uses non-parametric methodology to develop a non-oriented and non-radial Data Envelopment Analysis (DEA) model with NPLs as undesirable output. The dataset of 39 Indian commercial banks for period of 5 years is selected for the study. The findings of the study prove that considering risk into performance modelling leads to an unbiased efficiency indicator. Also, the non-parametric test confirms the relationship between operational efficiency and ownership. The study uses non-orientation modelling results to reveal inefficient sources within under-performing banks. As per the findings, slack variable analysis reveals two problem areas: ‘fixed assets’ and ‘NPLs’. A higher focus on improving utilization of fixed assets as well as controlling the level of rising NPL (risk) is highly significant for benchmarking performance. Overall, the study supports the business decision to control excess inputs and outputs for banks to achieve the efficient frontier. Significant managerial implications are linked to findings of the study focusing towards performance improvement of banks.

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Profit efficiency of banks in Colombia with undesirable output: a directional distance function approach

Cited by 6 publications

References 41 publications

Africa Countries’ Energy Efficiency: Evidence from a Directional Distance Function Approach

Africa Countries’ Energy Efficiency: Evidence from a Directional Distance Function Approach

Impact of Non-Performing Assets over Bootstrapped Efficiency of Banks: Analysis of Indian Domestic Banks

Operational Performance Modelling of Indian Banks: A Data Envelopment Analysis Approach

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