Assessing productivity in the presence of negative data and undesirable outputs

Abstract

Few studies address the presence of negative data and undesirable outputs in productivity assessment. This study proposes a range-adjusted measure model that uses a non-radial Malmquist productivity index to estimate dynamic productivity in the presence of negative data and undesirable outputs. Banking-industry data are used to demonstrate the proposed model. The results show that during the 2007–2009 global financial crises, bank productivity deteriorated, mainly because of technical changes, and smaller banks suffered smaller financial losses. Finally, a decision making matrix based on the analysis results is presented to show the implications of the proposed method.