Kankana Mukherjee

Productivity growth in large US commercial banks: The initial post-deregulation experience

Abstract We explore productivity growth for a group of 201 large US commercial banks over the initial post-deregulation period from 1984 to 1990, using data envelopment analysis (DEA). We measure productivity growth using Malmquist productivity indexes and isolate the contributions of technical change, technical efficiency change, and scale change to productivity growth. We find overall productivity growth at the rate of about 4.5% per year on average, but productivity declined by 7.61% between 1984 and 1985 and by 0.33% between 1988 and 1989. Our second-stage panel regressions reveal that larger asset size and specialization of product mix associate with higher productivity growth while higher equity to assets associates with lower productivity growth.

DECOMPOSITION OF THE FISHER IDEAL INDEX OF PRODUCTIVITY: A NON-PARAMETRIC DUAL ANALYSIS OF US AIRLINES DATA*

In this paper, the authors offer a nonparametric method of decomposing the Fisher ideal index of productivity into individual factors measuring technical efficiency change, allocative efficiency change, shift in the cost function, scale economies due to output change, and an adjustment factor reflecting change in the output attributes. Cross-section data from the U.S. airline industry for the years 1983 and 1984 are utilized in an empirical application illustrating this method. Copyright 1996 by Royal Economic Society.

Market Structure and Technical Efficiency in the Hospital Services Industry: A DEA Approach:

This article uses data envelopment analysis and multiple regression analysis to examine empirically the impact of various market-structure elements on the technical efficiency of the hospital services industry in various metropolitan areas of the United States. Market-structure elements include the degree of rivalry among hospitals, extent of HMO activity, and health insurer concentration. The DEA results show the typical hospital services industry experienced 11 percent inefficiency in 1999. Moreover, multiple regression analysis indicates the level of technical efficiency varied directly across metropolitan hospital services industries in response to greater HMO activity and private health insurer concentration in the state. The analysis suggests the degree of rivalry among hospitals had no marginal effect on technical efficiency at the industry level. Evidence also implies that the presence of a state Certificate of Need law was not associated with a greater degree of inefficiency in the typical metropolitan hospital services industry.

Measuring energy efficiency in the context of an emerging economy: The case of indian manufacturing

In recent years the Indian economy has achieved a rapid growth rate. However, one of the challenges facing the economy is the large energy supply that would be needed to sustain this growth path. Hence attaining energy efficiency is crucial for the economy. This paper examines the Indian manufacturing sector and utilizes a variant of the directional distance function to obtain comprehensive measures of performance of the major manufacturing states, given the joint goals of achieving energy conservation and output growth. The results of the empirical application reveal that given the prevailing technology, the average manufacturing firm across the states could reduce energy input and increase output simultaneously by an annual average of 3.84%, by improving technical efficiency. To accommodate a larger simultaneous increase in output and reduction in energy use, India should adopt superior technologies so as to shift the efficient frontier outward.

Explaining the efficiency of local health departments in the U.S.: an exploratory analysis

No study to date has analyzed the efficiency at which local health departments (LHDs) produce public health services. As a result, this study employs data envelopment analysis (DEA) to explore the relative technical efficiency of LHDs operating in the United States using 2005 data. The DEA indicates that the typical LHD operates with about 28% inefficiency although inefficiency runs as high as 69% for some LHDs. Multiple regression analysis reveals that more centralized and urban LHDs are less efficient at producing local public health services. The findings also suggest that efficiency is higher for LHDs that produce a greater variety of services internally and rely more on internal funding. However, because this is the first study of LHD efficiency and some shortcomings exist with the available data, we are reluctant to draw strong policy conclusions from the analysis.

Quantity, Quality, and Efficiency for a Partially Super-Additive Cost Function: Connecticut Public Schools Revisited

The dual cost function is partially super-additive when an output quantity bundle of a given quality can be produced at a lower cost by breaking up the output into a number of smaller bundles of the same quality to be produced by several firms instead of the entire bundle being produced by a single firm. In this paper, we build on Maindirattas concept of size efficiency and propose a nonparametric method using mixed integer programming to measure cost efficiency allowing for partial super-additivity of the cost function. The proposed method is applied to data from Connecticut public school districts for the years 1980–81 through 1983–84.

Direct And Indirect Measures Of Capacity Utilization: A Non-Parametric Analysis Of Us Manufacturing

We measure the capacity output of a firm as the maximum amount producible by a firm given a specific quantity of the quasi-fixed input and an overall expenditure constraint for its choice of variable inputs. We compute this indirect capacity utilization measure for the total manufacturing sector in the US as well as for a number of disaggregated industries, for the period 1970-2001. We find considerable variation in capacity utilization rates both across industries and over years within industries. Our results suggest that the expenditure constraint was binding, especially in periods of high interest rates.

A study of size efficiency in US banking: identifying banks that are too large

Maindiratta (1990) questioned the practical relevance of the most productive scale size (MPSS) and the associated concept of scale efficiency on the grounds that the observed output bundle of a firm or decision making unit (DMU), in many situations, is an assigned task and cannot be altered by the DMU. Also, in a market economy, the output-input combinations at the MPSS may not be economically viable. It would still be of interest to examine whether greater input saving can be achieved if the assigned output bundle is produced collectively by several banks, each operating efficiently, rather than individually by a single bank operating efficiently. In any specific case. the optimal number of smaller banks—if an existing bank should be broken up at all— is determined within a mixed integer programming model. In this study we apply DEA, utilizing the input and output data for the years 1984–1990 from 201 banks each with assets in excess of 1 billion dollars and hence regarded as ‘large banks’ by asset-size ...

Data Envelopment Analysis with Aggregated Inputs and a Test of Allocative Efficiency When Input Prices Vary Across Firms

In this paper we generalize the allocative efficiency test of Banker et al. (2007) to the situation where relative input prices vary across firms. It is shown that when firms face different input prices, using actual expenses for measuring aggregated inputs (as is a common practice) would lead to misleading conclusions about allocative efficiency. We describe the appropriate procedure for constructing the aggregate input when the relative prices are known and they vary across firms. The parallel between input aggregation in DEA and parameter restriction in regression models is also pointed out. The proposed aggregation procedure needs to be followed, irrespective of whether the subsequent statistical test is parametric, standard nonparametric, or based on bootstrap.