Leigh Drake

Efficiency in Japanese banking: An empirical analysis

Abstract This paper utilises the non-parametric frontier approach, data envelopment analysis, to analyse the technical and scale efficiency in Japanese banking using a recent cross-section sample. Efficiency analysis is conducted across individual banks, bank types and bank size groups. Following Berger and Humphrey [Eur. J. Oper. Res. 98 (1997) 175], problem loans are controlled for as an exogenous influence on bank efficiency. Powerful size-efficiency relationships are established with respect to both technical and scale efficiency. Furthermore, the logic of the recent large-scale merger wave in Japan is questioned as the larger (City) banks are generally found to be operating above the minimum efficient scale and to have limited opportunity to gain from eliminating X-inefficiencies. The opposite result is found for the smaller banks. Finally, the results suggest that controlling for the exogenous impact of problem loans is important in Japanese banking, especially for the smaller regional banks.

The impact of macroeconomic and regulatory factors on bank efficiency: A non-parametric analysis of Hong Kong¿s banking system

This paper assesses the relative technical efficiency of institutions operating in a market that has been significantly affected by environmental and market factors in recent years, the Hong Kong banking system. These environmental factors are specifically incorporated into the efficiency analysis using the innovative slacks-based, second stage Tobit regression approach advocated by Fried et al (1999). A further innovation is that we also employ Tones (2001) slacks-based model (SBM) to conduct the Data Envelopment Analysis (DEA), in addition to the more traditional approach attributable to Banker, Charnes and Cooper (BCC) (1984). The results indicate: high levels of technical inefficiency for many institutions; considerable variations in efficiency levels and trends across size groups and banking sectors; and also differential impacts of environmental factors on different size groups and financial sectors. Surprisingly, the accession of Hong Kong to the Peoples Republic of China, episodes of financial deregulation, and the 1997/98 South East Asian crisis do not seem to have had a significant independent impact on relative efficiency. However, the results suggest that the impact of the last mentioned may have come via the adverse developments in the macro economy and in the housing market.

The use of data envelopment analysis to monitor hotel productivity

Data envelopment analysis (DEA) was used to monitor and benchmark productivity in a chain of 15 hotels over a 12-month period. Quarter results were compared with each other and with standard accounting data for the same period. In this way it was possible to identify and study units which showed anomalous behavour in terms of their measured productivity and gross profit. These were apparently related to factors other than size or staffing levels. Advantages and disadvantages of DEA are discussed, as well as its potential for the motivation and appraisal of local management and for optimizing budgetary control.

Efficiency and productivity change in UK banking

Despite substantial structural change and a significant intensification of competition in the UK financial services sector in recent years, the UK banking sector remains relatively under researched. This paper uses a panel data sample covering the main UK banks over the period 1984 to 1995 to investigate relative efficiencies within the sector and to analyse productivity change in UK banking over the sample period. The results provide important insights into the size-efficiency relationship in UK banking and offer a perspective on the evolving structure and competitive environment within which banks are currently operating.

Relative efficiency in the branch network of a UK Bank: an empirical study

This paper investigates the relative efficiency of a UK clearing banks branches using the non-parametric programming methodology. In addition to calculating indices of technical (productive) efficiency for all branches in the sample, this measure of technical efficiency is dichotomized into its constituent components, scale efficiency and pure technical efficiency. Finally, the non-parametric technique is utilized to investigate the causes of observed inefficiency in the case of one illustrative branch example in detail.

The measurement of English and Welsh police force efficiency: A comparison of distance function models

Abstract Since the Labour government came to power in 1997, it has introduced a regime whereby public services are accountable in respect of best value performance indicators (BVPIs). A recent Public Services Productivity Panel (PSPP) (2000) report has developed a set of criteria whereby the economic analysis of police force efficiency by the Home Office is to be made standard. In this paper we utilise an innovative distance function strategy in contrast to the standard efficiency techniques (data envelopment analysis, DEA and stochastic cost frontier analysis) advocated in PSPP (2000) . We present results from four different distance function models: DEA; free disposal hull (FDH); super-efficiency; and stochastic frontier analysis; in order to assess police force efficiency during the sample period 1996–1999.

Testing for Convergence between UK Regional House Prices

DRAKE L. (1995) Testing for convergence between UK regional house prices, Reg. Studies 29, 357–366. This paper uses the Kalman filter/time varying parameter estimation technique to test for convergence between UK regional house prices. This issue is significant given the historical disparities in regional house price inflation rates and the unprecedented downturn in both UK and most regional house prices in the late 1980s and early 1990s. The evidence suggests that there are clear regional differences in the pattern of UK house price movements. In particular, house prices in the North and Scotland show evidence of greater divergence from prices in the Rest of the South East region than do the Southern and Midlands regions. DRAKE L. (1995) Une analyse pour determiner la convergence des prix du marche immobilier regionaux au Royaume-Uni, Reg. Studies 29, 357–366. Cet article se sert de la technique dite Kalman Filter afin de determiner la convergence des prix du marche immobilier regionaux au Royaume-Uni. C...

Technical and scale efficiency in UK building societies

A non-parametric programming approach is utilized in order to analyse the overall technical efficiency of UK building societies and to decompose this measure into its subcomponents, pure technical and scale efficiency. Non-parametric statistical analysis and regression analysis are subsequently used to test the relationship between asset size and the various measures of efficiency. The use of 1988 data (post 1986 Building Societies Act) permits the non-parametric analysis of building society efficiency to be conducted in a multi-product context.

X-efficiency and scale economies in policing: a comparative study using the distribution free approach and DEA

This study uses both parametric and nonparametric techniques to analyse scale economies and relative efficiency levels in policing in England and Wales. Both techniques suggest the presence of significant scale effects in policing and considerable divergence in relative efficiency levels across police forces.

Modelling UK house prices using cointegration: an application of the Johansen technique

This paper provides an econometric analysis of the long-term equilibrium determination of UK house prices using the relatively recent Johansen cointegration procedure. This long-term equilibrium specification is then utilized in order to estimate a parsimonious dynamic model for UK house prices.