DEA-based Malmquist Productivity Index Research Articles

Networking effects of innovations: evidence from the Global South

Purpose This paper aims to investigate the short- and long-run influence of core banking solutions (CBSs) on productive efficiency and identify the presence of potential network externalities arising from CBS adoption. This paper further examines the differential behaviour of long-term effects across the banking structure. Design/methodology/approach This study uses a panel data set of Indian commercial banks from 2005 to 2021. Economic efficiency is quantified using VRS-based DEA programming algorithms. Productivity changes are measured through an input-oriented, DEA-based Malmquist productivity index. Short- and long-run effects are examined through a finite autoregressive distributed lag model, estimated through a pooled mean-group estimator. Findings Findings suggest that CBS adoption negatively correlates with cost structure until the first year of adoption. Nevertheless, significant benefits are visible from the third year. Furthermore, such associations are highly susceptible to the industry structure. CBS results in higher incremental benefits for private banks vis-à-vis state-owned banks. Large banks receive significant and quicker productivity improvements from CBS vis-à-vis small banks. Bank age guides CBS–performance associations, highlighting that mature banks may face the issue of legacy infrastructure in CBS adoption. The resultant networking externalities are significant as they enhance the attractiveness of the network, which subsequently augments inter-branch and inter-bank communications. Originality/value To the best of the authors’ knowledge, this study is the first to recognise the stickiness of one of the most homogeneously adopted technological innovations in the Indian banking sector. The presence of a conjoint technological network has the potential to enhance the service delivery process and ensure superior returns for Indian banks.

Analysis of profit efficiency of corporate hospitals in India during COVID-19 – An DEA-MPI based approach

ABSTRACT Healthcare organizations must operate efficiently to provide affordable care without compromising their sustainability and competitiveness. The purpose of this is to measure the profit efficiency of select Indian Corporate Hospitals during the COVID-19 pandemic. Further, the study attempts to analyze the productivity changes in select corporate hospitals during COVID-19 and postimplementation of the national insurance policy in India. The study used the Data envelopment analysis (DEA) technique to measure the efficiency of corporate hospitals. It utilizes Constant Return to Scale (CRS), and Variable Return to Scale (VRS) to estimate profit inefficiency. DEA-based Malmquist Productivity Index (MPI) was used to examine the productivity change during the last three years since the outbreak of COVID-19. The DEA-MPI model is iterated for panel data for Financial Year 2018–2021. with year-wise employee benefits and operating expenses as the input parameters and year-wise net sales as the output parameter. The study reveals surprising results and requires critical analysis. Out of select hospitals, 80% of hospitals were found inefficient using CRS while 70% of the hospitals were found inefficient using VRS. The findings of this study are useful for healthcare administrators and managers to highlight improvement programs for efficiency maximization .

Operational Efficiency and Productivity Change in Cross-country Commercial Banking Industries: Evidence From South Asia

South Asia (SA) predominantly consists of developing economies with massive growth potential in their banking industries. To this end, this paper examines the efficiency and productivity change in 136 commercial banks (CBS) of 6 countries: Afganistan, Bangladesh, India, Nepal, Pakistan and Sri Lanka in South-Asia from 2013 to 2019. Data envelopment analysis (DEA) method is employed to identify the efficiency frontier for South Asian CBS (SA-CBS). DEA-based Malmquist productivity index (MPI) is used to determine whether a change in total factor productivity of SA-CBS is due to technical efficiency change or technology change. Findings indicate that the average technical efficiency of SA-CBS is 62.45 percent, which reveals that 37.55 percent of inefficiency exists under the study period. In addition, results show that technical inefficiency in SA-CBS is attributed to pure technical inefficiency rather than scale inefficiency. Results further indicate a marginal decline in productivity over the study period, where the average total factor productivity score is 0.998. This deterioration is mainly attributed to technical efficiency decline since the average technological change increased, thus causing a negative impact on the total factor productivity.

Assessing Bank Performance Using Malmquist Productivity Index Approach and One-Step System GMM Dynamic Panel Data Model

This article evaluated the total factor productivity of Ethiopian banks from 2011 to 2020 using the DEA-based Malmquist productivity index and one-step system GMM dynamic data approaches. The study covered the 14 banks that were operational during the study period and examined the regressive, stable, and progressive nature of their productivity taking into account both the production and intermediary role of banks. We used constant returns to scale to compare the efficiency and productivity and establish a benchmark for bank performance. Interest expense, operating non-interest expense, and deposits were used as input variables and interest income, operating non-interest income, and loan and advances as output variables to analyze the productivity change of banks in their production role while deposits and loans were used as input and output variables, respectively to study productivity change of banks in their intermediation role. The study concludes nominal efficiency change both due to improved operations and management practices as well as increased economies of scale and deterioration in technological efficiency. We also conclude nominal regress in total bank factor productivity during the study period and a regressive, and progressive impact of technology, and improved management practices on the productivity of Ethiopian banks, respectively. Consequently, we suggest a thorough feasibility study in the technology choice of banks.

Does globalisation have an impact on dual banking system productivity in selected Southeast Asian banking industry?

PurposeGlobalisation has influenced many countries, over the last few decades with financial globalisation and liberalisation bringing regulatory reforms in the banking sector. Thus, this study aims to fill a gap in the literature by examining the influence of globalisation on Islamic and conventional bank productivity in Southeast Asia.Design/methodology/approachThe sample comprised 155 banks (23 Islamic and 132 conventional) from 4 countries from 2008 to 2017. Panel data techniques will be used, together with data envelopment analysis (DEA)-based Malmquist productivity index (MPI), to investigate the impact of chosen main determinants on bank productivity. A panel regression analysis will be performed after generating the productivity index from the DEA-based MPI frontier.FindingsAccording to the findings, Islamic banks are statistically significantly more productive than conventional banks, and the findings of the t-test are corroborated by the findings of nonparametric tests. Furthermore, the findings of the panel regression model reveal that bank specific factors and macroeconomic variables are significant determinants to bank productivity. Surprisingly, the findings also show that the influence of social globalisation elements tends to be negatively related to conventional bank productivity.Originality/valueThis study adds to the existing literature by bridging the globalisation gap in the productivity of the dual banking industry, particularly in the specific context of Southeast Asia, given that the area is representative of Islamic and finance globally.

Exploring the Sustainability of Resource Flow and Productivity Transition in Vietnam from 1978 to 2017: MFA and DEA-Based Malmquist Productivity Index Approach

Resource efficiency is a primary policy goal in many developing countries that are resources suppliers. This study performed a first try to explore the resource productivity and efficiency of an emerging world factory, Vietnam, by applying an improved economy-wide material flow analysis (MFA) integrated with a data envelopment analysis (DEA)-based Malmquist productivity index approach (MDEA). Resource flows from 1978 to 2017, and the corresponding utilization efficiency considering the unexpected environmental outputs, as well as productivity were explored in depth. The results highlighted a positive correlation between rapid growth among domestic material consumption (DMC), GDP per capita, and material intensity (DMC/capita) in Vietnam during the last four decades. Meanwhile, the resource productivity (USD/DMC) increased from 82.4 USD/ton to 125 USD/ton (2017), presenting a much slower pace than that of Japan and China. The IPAT-based decomposition analysis highlighted the contribution of rising affluence (94%) and population (21%) to the rapid growing DMC, while the technology factor (DMC/GDP) needed to be further enhanced. Finally, the total factor productivity, when comparing between Vietnam, China, South Korea, and Japan, showed that, on the one hand, the Vietnamese economy has strongly been changed in a positive direction with EFFCH 1.061 and TECHCH 1.046 during the last four decades. One the other hand, Vietnam is still material intensive and has low material productivity. Our analytical results recommend Vietnam to strengthen technology innovation and aim for efficiency enhancement through closely coordinated policies on sustainable resource consumption, carbon reduction, and economic growth, in line with the United Nations Sustainable Development Goals for 2030 (SDGs 2030).

Measuring Efficiency of Selected Indian Commercial Banks : A DEA-Based MPI Approach

This paper attempted to measure the change in productivity of 19 commercial banks in India from 2013 – 2018. The nature of efficiency and productivity change was investigated with the help of the output - oriented Malmquist Productivity Index (MPI) through intermediation approach. The MPI has components that are used in performance measurements, such as changes in technology efficiency, technical efficiency, pure technical efficiency, scale efficiency, and total factor productivity. The results of the study demonstrated that Ratnakar Bank Limited had the highest MPI score against both the technological change and total factor productivity change ; whereas, State Bank of India and Punjab National Bank had the lowest MPI scores. Overall, the private sector banks were found to be more productive compared to the public sector banks for the period under consideration.

Productivity growth, catching-up and technology innovation in microfinance institutions in India: evidence using a bootstrap Malmquist Index approach

PurposeThis paper aims to examine the total factor productivity (TFP) change and its components: efficiency change and technical change in microfinance institutions (MFIs) in India operating from 2005 to 2018. The study also scrutinizes the variations in productivity levels across the distinct organizational form and size groups of MFIs. In addition to this, the authors identify the contextual factors that determine TFP growth, catching-up and technology innovation in MFIs.Design/methodology/approachThe study employs a smooth homogeneous bootstrap estimation procedure of Simar and Wilson (1999) for obtaining reliable estimates of Malmquist indices –productivity and its components – in a data envelopment analysis (DEA) framework for individual MFIs. In order to identify the determinants of productivity change and its components, the study follows Simar and Wilson's (2007) guidelines and applies a bootstrap truncated regression model. The double bootstrap procedure performs well, both in terms of allowing correct estimation of bias and deriving statistically consistent productivity estimates in the first and root mean square errors in the second stage of the analysis.FindingsThe empirical results reveal that the MFIs have shown average productivity growth of 6.70% during the entire study period. The observed productivity gains are primarily contributed by a larger efficiency increase at the rate of 4.80%, while technical progress occurs at 2.3%. Nonbanking financial companies (NBFC)-MFIs outperformed non-NBFC-MFIs. Small MFIs show the highest TFP growth in terms of size groups, followed by the large MFIs and medium MFIs. The bootstrap truncated regression results suggest that the credit portfolio, size and age of MFIs matter in achieving higher productivity levels.Practical implicationsThe practical implication drawn from the study is that the Indian MFI industry might adopt the latest technology and innovations in the products, risk assessment and credit delivery to improve their productivity levels. The industry must focus on enhancing the managerial skill of its employees to achieve a high productivity level.Originality/valueThis study is perhaps the initial attempt to explain the productivity behavior of MFIs in India by deploying a statistically robust double bootstrap procedure in the DEA-based Malmquist Productivity Index (MPI) framework. The authors estimate the bias-adjusted productivity index and its decompositions, which represent more reliable and statistically consistent estimates. For contextual factors responsible for driving productivity change, the study deploys a bootstrap truncated regression approach.

An Empirical Analysis of Productivity Changes in the Ethiopian Commercial Banks: Using DEA- Based Malmquist Productivity Index Approach

The rationale of this paper is to measure the productivity change of commercial banks in Ethiopia based on DEA-based Malmquist productivity index approach. For this purpose, this study employed a balanced panel data of eight commercial banks operating from 2006 to 2017. The result shows that the banks under study were found to have reported a slight productivity progress of 0.4% over the whole study period. The productivity improvement is accredited to the technological progress (0.9%) rather than the efficiency loss (0.5%). Meanwhile, the finding suggests that the decline in the technical efficiency of the banks was caused both by pure technical efficiency and scale efficiency. Alternatively, the finding of the study indicates that the productivity performance of all the banks under study, with the exception of AIB and CBE, remain almost constant in spite of their size during the period. AIB and CBE have exhibit an average productivity progress of 2% and 1.4% respectively during the study period. In the study period, AIB was found to be the most inefficient (2.4%) and the most productive one (2%) comparing to other banks in the study due to retrogress in scale efficiency change (2.1%) as well as technical progress (4.5%) in that order. Further, the paper suggests that the productivity performance of the banks under study was not significantly different in the period. So, the banks have to move forwards their technology to increase productivity more and more, while improving the resource utilization efficiency by up grading their managerial practices and scale operations (optimum size)

The Impact of Delay Affecting Airport Efficiency: Sustainability Perspective

Airport industry has experienced significant growth over the recent years. Nevertheless, few studies have analysed their operational efficiency together with airport delay condition. This paper aims to modify the original DEA-based Malmquist productivity index by integrating with delay factor as it is the critical irregularity frequently suffered in most of the major worldwide airports. The top 20 busiest passenger airports in Asia are the sample airports. The examination presents the result of the current situation that most of the airports perform well in term of operational efficiency. However, the results are significantly dropped when the delay is included, meaning if airports still have a high percentage of delay incurred, airports definitely face with several issues such as airline and passenger dissatisfaction or deficiency in airport performance. Without delay, airport can reduce CO2 emission, increase airport capacity, and improve customer satisfaction. The finding indicates that airports shall obviously eliminate or reduce percentage of delay in order to accomplish airport sustainability development for the future.

Total Factor Productivity Growth of African Public Universities

The study investigates the Total Factor Productivity Growth of 15 African public universities using the DEA-Based Malmquist Productivity Index. The general model, teaching-only model and research-only model are estimated. The operating environment is adjusted to ascertain the extent to which it affects the productivity of the African public universities. Total factor productivity gains for African public universities averaged at 7.5%, 0.7% and 6.8% for the general model, teaching-only model and research-only model, respectively. Productivity improvements are therefore majorly a result of research productivity gains rather than teaching productivity gains before and after adjusting for the operating environment. The university research productivity gains are, however, mainly attributed to technological progress rather than technical efficiency change. Keywords: African public universities, Malmquist Productivity Index, Technical efficiency change, Technological change, Total factor productivity growth DOI : 10.7176/JESD/10-2-16

Food security performance assessment of the US states: a DEA-based Malmquist productivity index approach

The national trend in food security has been declining and a state-by-state analysis considering social and macro-economic characteristics of the holistic food security assessment problem has not b...

Food security performance assessment of the US states: a DEA-based Malmquist productivity index approach

Food security performance assessment of the US states: a DEA-based Malmquist productivity index approach

Total factor productivity growth and technological change in the telecommunications industry

The fast growing telecommunications industry in China has been experiencing dramatic technological change and substantial productivity growth. The actual productivity growth pattern in the sector, however, need to be empirically examined. In this paper, using input and output data at the provincial level, we employ DEA-based Malmquist productivity index to estimate productivity change, technological change and relative efficiency change in China's telecommunications industry for the period spanning the years from 2011 to 2015. The results show that based on our sample, the productivity improved by 22.9% per annum, which was exclusively due to an average of 25.5% technological progress in the industry production function, while the average efficiency change is slightly negative. Our results also indicate that regions with relatively low levels of telecommunications (and economic) development have a greater chance and ability of enhancing telecommunications productivity growth through technological catch-up. In addition, we find that the industry experienced significantly higher productivity growth and technological progress in the later sample period between 2013 and 2015 than in the early period between 2011 and 2013.

Productivity change of national health systems in the WHO Eastern Mediterranean region: application of DEA-based Malmquist productivity index

BackgroundThe pursuit of efficiency and productivity is one of the goals of health systems. In the era of Sustainable Development Goals and particularly the move towards universal health coverage, it is imperative to curb wastage of resources to ensure sustainable access of the population to needed and effective health services without enduring financial hardship. This study aims to assess total factor productivity change of national health systems of 20 countries in the WHO’s Eastern Mediterranean Region.MethodsData Envelopment Analysis (DEA)-based Malmquist index is used to assess total factor productivity change and its components – efficiency change and technical change. To assess the robustness of the Malmquist index estimates, bootstrapping was performed. Outputs used are life expectancy at birth for both sexes and infant mortality; while total expenditure on health per capita in international dollars (PPP) is used as a measure of input. Panel data for the period 2003–2014 was extracted from databases of the WHO and the World Bank.ResultsIn all but five countries covered in the study, a decline in the mean total factor productivity is observed during the period 2003–2014. The decline is driven by technical regress. In all countries, the technical change component of the Malmquist TFP index is less than unity (range: 0.896 to 0.945). All countries exhibited growth in efficiency (efficiency change exceeding one) except two countries (Djibouti and Iraq). The growth in efficiency was mainly due to change in scale efficiency. Overall, total factor productivity in the region declined by 3.8%. This was due to a 9.1% decline in technical change, which overshadowed the 5.8% increase in efficiency. Three countries - Libya, Qatar and Yemen – showed a marginal growth in total factor productivity. There was no change in total factor productivity in Kuwait and Lebanon.ConclusionThe decline in total factor productivity over the study period is likely to hamper achieving the targets of Sustainable Development Goal 3 of ensuring healthy lives and promoting well-being for all at all ages. It is recommended that country-level studies on efficiency and productivity of health systems be conducted in order to intensively examine the determinants of inefficiency and productivity decline and implement appropriate interventions that could enhance efficiency and productivity.

Swiss Cantonal Banks: A DEA Efficiency and Productivity Analysis

This paper applies a data envelopment analysis (DEA) to study the efficiency and productivity changes in the Swiss cantonal bank sector in the period 2006-2014. The efficiency analysis is conducted by applying the production input-oriented DEA variable returns to scale model in a three-stage procedure. The productivity is studied by estimating a DEA-based Malmquist Productivity Index (MPI) that provides evidence of increasing productivity growth on average for the sector in the studied period. The main source of productivity growth as per the components of the Banker, Charnes and Cooper (BCC) MPI model is related to a frontier-shift (technological innovation) rather than to improvements in the technical efficiency. The decreasing average DEA scores in the post-global financial crisis period of 2008-2014 further support this finding. In the second stage of the efficiency analysis, the environmental factors influencing the productivity growth are analysed by conducting a general method of moments (GMM) regression. The results provide evidence of a positive and statistically significant relationship between the stock of residential buildings per canton and technical efficiency. In the third stage, the environmental variables from the second-stage regression are included within the constraints of the first-stage DEA model as proposed by Ray [1]. The third-stage DEA scores support the evidence of slightly decreasing average post-global crisis technical efficiency. The overall average technical efficiency in the Swiss cantonal banking sector, however, remains at a relatively high level in the studied period.

Measuring the productivity changes with double frontiers data envelopment analysis for two-stage processes

The purpose of this paper is to develop an output oriented methodology with constant return to scale (CRS) assumption for calculating productivity changes by using double frontier (optimistic and pessimistic) data envelopment analysis (DEA) simultaneously for two-stage processes. Measuring the productivity changes with Malmquist productivity index (MPI) via double frontiers DEA with single process has been defined by Wang and Lan (2011) as a geometrically average of optimistic and pessimistic point of views to generate an aggregate MPI. In order to develop and modify the previous studies, in this paper we have proposed a method to modify Wang and Lan (2011) aggregate MPI and also extend it to two-stage process which we refer to the double frontiers two-stage DEA (DFTDEA). It should be mentioned that the proposed model of this paper measures the MPI's distance functions for two individual stages and whole process for both DEA different points of view by the traditional DEA models and supposed relational models in output oriented CCR models, respectively. Therefore, the identified double frontiers two-stage DEA (DFTDEA-based MPI) is more realistic and comprehensive than the conventional optimistic or pessimistic DEA-based MPI individually. Subsequently, the proposed approach is examined to five Iranian commercial banks over the five-year period, 2009-2013.

An Assessment of Total Factor Productivity (TFP) of SME Business in Bangladesh using DEA based Malmquist Productivity Index (MPI)

For sustainable growth, SMEs play a dynamic role through creation of employment, increase of aggregate production, maximization of economic resources in the economy. Considering SMEs impact on diversified area of economy, the subject matter of SMEs productivity draw intense attention for intense research over last decade. In Bangladesh, as developing country, SMEs contribution becoming significant for employment generation, reduce income inequalities and lead to export through maximization of production. The objective of this study to assess SMEs performance for the period from 2005 to 2014. Study measures productivity using Malmquist Productivity Index (MPI) having one outputs and three inputs. We run regression analysis to identify residual by comparing expected output and an actual output having available inputs. Study result revealed that productivity index (MALM = 1) remains constant, but it is found that technical efficiency enhancement from 2010 to 2014, however overall efficiency declined by 2.6% as well. The residual analysis revealed no significant deviation between expecting output and actual output by using available inputs. This research outcome will give a glimpse about overall SME performance, which will induce researchers to go further in-depth analysis for bringing more insight for SME development. 

The Effects of Regulations on the Performance of Banks: Evidence from the Turkish Banking Industry

PurposeTo investigate the effects of regulations, macroeconomic changes, and political events on the efficiency of the Turkish banks during the period 1997-2013, when crucial changes were experienced. To analyze the effects of an extensive set of bank-specific and environmental factors on the efficiency, since the diversions could not only be related to new regulations.Design/methodology/approachA two-stage procedure is employed. First, the productivity changes of each bank and of the whole sector are measured by a DEA-based Malmquist Productivity Index (DEA-MPI). Second, the effects of selected internal and external factors on productivity are analyzed with regression analysis. The sector is especially handled before and after 2001, when one of the most catastrophic crises is observed and moment after which a series of new regulations are implemented.FindingsDuring the period 1997-2001, the efficiency deteriorated due to the 2001 crisis; after the crisis, an improvement was observed. All models indicate the source of improvements as efficiency instead of technological changes. Rather than external, internal factors seem to be more effective on productivity. Therefore, the importance of regulations for the soundness of banks, management quality and monitoring may be more crucial than what is thought. In general, a new macroeconomic environment, particularly new regulations, have positive effects on productivity. Tighter regulations, monitoring, restrictions, strong supervision, more capital, and new reforms have a positive impact on efficiency.Originality/valueThe study spans a wide period to analyze the sector using three different perspectives. It analyzes the effect of the 2001 financial crisis and subsequent regulations. It handles an extensive set of internal and external factors; and it tests each factor with nine different DEA-MPI models for consistency. Turkey's unique environmental factors, such as the unstable macroeconomic conditions, high inflation and a subsequent disinflation period, high interest rates, new regulations and crisis experience, among others, also make the study distinctive.

Measuring energy consumption efficiency of the construction industry: the case of China

The energy conservation has become a considerable issue in construction industry for achieving sustainable development. Therefore it is crucial for policy-makers to look for optimized and flexible tools to measure the total energy consumption efficiency in construction industry. Data envelopment analysis (DEA) can be applied for multiple input and output decision-making units (DMUs) productivity measurement. DEA-based Malmquist productivity index (MPI) can be used as a tool for measuring the productivity change longitudinally. In this paper, we use input-oriented model to measure the energy consumption productivity change of the construction industry from 2004 to 2009 with data in 26 provinces of China. It is found that only Guangdong demonstrated effective energy improving in the whole reference period. It also identified the regional groups always lie on the efficiency frontier of energy consumption as benchmarks. Regional analysis shows that energy conservation gaps exist between northeastern, western region and central, eastern region. DEA-based Malmquist productivity index provides a good way to measure the energy consumption efficiency and can help policy-makers to improve strategies of sustainable development in China.