Differences In Cost Efficiency Research Articles

DOES PERSISTENT COST INEFFICIENCY EXIST? A MUNICIPAL-LEVEL ANALYSIS OF EXPENDITURE IN VICTORIAN LOCAL GOVERNMENT

While a voluminous empirical literature has investigated cost efficiency in local government, until recently no effort has been invested in decomposing municipal performance into its persistent efficiency and transient efficiency components. In this paper, we estimate persistent and transient cost efficiency that might be attributed to managerial and environmental factors in the Victorian state local government system in Australia using stochastic frontier analysis over the period from 2014/2015 to 2018/2019. In addition, we seek to contribute to the empirical literature on local government performance by estimating differences in cost efficiency between urban and rural councils and the relationship between the transient cost efficiency and the overall cost performance of Victorian local councils. We find that the overall cost efficiency (OCE) of local councils is highly correlated with transient (short term) cost efficiency and that urban councils are more cost-efficient than their rural counterparts. Various public policy implications are then considered.

Agroecological intensification: Can organic conversion improve the production efficiency? A perspective from smallholder kale production systems Kenya

The increasing resource and ecological challenges in agriculture necessitate agricultural intensification and resource optimization. This study focuses on agroecological intensification using organic practices. It compares the production efficiency of the organic and non-organic smallholder kale production systems in Kenya. Using survey data collected from Kenya, the study estimated production (cost and revenue) efficiency of the kale production system by conducting data envelopment and stochastic frontier analysis and subjected the efficiency measures to propensity score matching analysis. The results show no significant difference in cost efficiency between organic and non-organic kale producers. However, revenue efficiency and income per unit production cost are lower among organic than non-organic kale producers. The results also show that the efficiency and productivity of the organic smallholder kale production system are limited by a lack of inputs (especially manure) but not labor. This implies that improving the efficiency of the smallholder organic kale production system requires more use of organic manure as well as research and training on organic pesticides. The finding concurs with literature that reports organic input problems and lower productivity in organic than non-organic production systems in developing countries and Kenya, especially in vegetables. It also shows that the organic production system is more labor-intensive than the non-organic system. • Study compared production efficiency of organic and non-organic kale production system. • Estimated production efficiency using data envelopment and stochastic frontier analysis. • Compared production efficiency using propensity score matching. • Revenue efficiency and income per unit cost lower in organic than non-organic system. • Efficiency and productivity of organic production system limited by inputs but not labor.

Measuring and Analyzing the Technical Efficiency of Bulgarian Municipalities – an Application of Data Envelopment Analysis (DEA)

Going through a series of crisis and post-crisis periods over the last twenty years has had a serious negative impact on public finances around the world, while at the same time the pressure on all levels of public sector governance to deliver more and better public services is growing. This requires a rethinking of the way public services are provided and funded, and efforts to improve performance through more efficient use of resources, and especially at local government level. On the one hand, as a result of global trends in decentralization, more and more spending responsibilities have been transferred to the local public sector and it has become a major provider of public services. On the other hand, the performance of local authorities is also one of the factors determining the decision of individuals and businesses to leave one local unit and choose another that offers better services at lower prices (lower tax burden). The present study aims to measure and evaluate the technical efficiency of Bulgarian municipalities through the application of the non-parametric method Data Envelopment Analysis (DEA). The results of the calculations of the technical efficiency of municipalities in Bulgaria show significant cost efficiency differences between local territorial units. In general, the management at the local level does not use effectively about 25% of their expenditures. The largest number of municipalities operate under increasing return of scale, and these are mostly small local territorial units.

Cost Efficiency Vis-à-Vis Revenue Efficiency Analysis of Indian Scheduled Commercial Banks in a Dynamic Environment

The paper endeavours to analyze Cost Efficiency vis-à-visRevenue Efficiency of Scheduled Commercial Banks (SCBs) as well as across ownership in India. Data Envelopment Analysis (DEA) has been employed to calculate the efficiency scores of SCBs over five points of time i.e. 2000-01, 2004-05, 2008- 09, 2012-13 and 2016-17. The differences in the efficiency scores are examined by applying Analysis of Variance (ANOVA). The results of Cost and Revenue Efficiency of Indian Scheduled Commercial Banks highlight that the highest level of inefficiency subsist on the cost side as Scheduled Commercial Banks have higher Revenue Efficiency scores in comparison to Cost Efficiency scores. Cost Efficiency across ownership shows that Public Sector Banks have higher Cost Efficiency in 2000-01. Private Sector Banks are cost efficient in 2004-05 while Foreign Sector Banks show higher Cost Efficiency scores in 2008-09, 2012-13 and 2016-17. Revenue Efficiency scores shows that Public Sector Banks have higher scores as compared to Private and Foreign Sector Banks in the 2000-01 and 2004-05. Foreign Sector Banks are revenue efficient in 2008-09 and 2016-17 with Private Sector Banks taking the lead in 2012-13. The results of ANOVA reveal that there exists a statistically significant difference in Cost Efficiency and Revenue Efficiency among banks in different sectors over different points of time.

Cost-efficient factors in local public spending: Detecting relationships between local environments, population size and urban area category

This study examines regional differences in local environment factors to better understand the sustainability of local governments indexed by per capita public spending. Under the condition of heterogeneous population size, we examine how factor characteristics differ depending on the spatial context represented by the urban area category. By employing a Cobb–Douglas cost function with congestion effects on public service provision, the estimated factors enable us to articulate major factors and differences in cost-efficiency between urban area categories. We found that statistical significance and even the signatures of local environment factors differ depending on the urban employment area category. Regarding factors such as the ratios of employees in secondary and tertiary industries, these did not tend to be statistically significant in small-sized urban areas, while small-sized cities in large-sized urban areas were likely to gain confidence intervals. Moreover, we did not observe any statistical significance for the ratio of elderly people due to the balance of spending between national and local governments. These findings could contribute to sustainable management of cities in the advent of population decline.

The cost efficiency of Vietnamese banks – the difference between DEA and SFA

PurposeThe paper aims to enrich previous findings for an emerging banking industry such as Vietnam, reporting the difference between the parametric and nonparametric methods when measuring cost efficiency. The purpose of the study is to assess the consistency in issuing policies to improve the cost efficiency of Vietnamese commercial banks.Design/methodology/approachThe cost efficiency of banks is assessed through the data envelopment analysis (DEA) and the stochastic frontier analysis (SFA). Next, five tests are conducted in succession to analyze the differences in cost efficiency measured by these two methods, including the distribution, the rankings, the identification of the best and worst banks, the time consistency and the determinants of efficiency frontier. The data are collected from the annual financial statements of Vietnamese banks during 2005–2017.FindingsThe results show that the cost efficiency obtained under the SFA models is more consistent than under the DEA models. However, the DEA-based efficiency scores are more similar in ranking order and stability over time. The inconsistency in efficiency characteristics under two different methods reminds policy makers and bank administrators to compare and select the appropriate efficiency frontier measure for each stage and specific economic conditions.Originality/valueThis paper shows the need to control for heterogeneity over banking groups and time as well as for random noise and outliers when measuring the cost efficiency.

Obesity negatively affects cost efficiency and outcomes following adult spinal deformity surgery

BACKGROUND CONTEXTObesity has risen to epidemic proportions within the United States. As the rates of obesity have increased, so has its prevalence among patients undergoing adult spinal deformity (ASD) surgery. The effect of obesity on the cost efficiency of corrective procedures for ASD has not been effectively evaluated. PURPOSETo investigate differences in cost efficiency of ASD surgery for patients stratified by body mass index (BMI). STUDY DESIGN/SETTINGRetrospective review of a single-center ASD database. PATIENT SAMPLEFive hundred five ASD patients. OUTCOME MEASURESComplications, revisions, costs, EuroQol-5D (EQ5D), quality-adjusted life years (QALYs), cost per QALY. METHODSASD patients (scoliosis≥20°, SVA≥5 cm, PT≥25°, or TK ≥60°) ≥18, undergoing ≥4 level fusions were included. Patients were stratified into NIH-defined obesity groups based on their preoperative BMI: underweight 18.5< (U), normal 18.5 to 24.9 (N), overweight 25.0 to 29.9 (O), obese I 30.0 to 34.9 (OI), obese II 35.0 to 39.9 (OII), and obesity class III 40.0+ (OIII). Total surgery costs for each ASD obesity group were calculated. Costs were calculated using the PearlDiver database, which reflects both private insurance and Medicare reimbursement claims. Overall complications and major complications were assessed according to CMS definitions. QALYs and cost per QALY for obesity groups were calculated using an annual 3% discount up to life expectancy (78.7 years). RESULTSIn all, 505 patients met inclusion criteria. Baseline demographics and surgical details were: age 60.8±14.8, 67.6% female, BMI 28.8±7.30, 81.0% posterior approach, 18% combined approach, 10.1±4.2 levels fused, op time 441.2±146.1 minutes, EBL 1903.8±1594.7 cc, and LOS 8.7±10.7 days. There were 17 U, 154 N patients, 151 O patients, 100 OI, 51 OII, and 32 OIII patients. Revision rates by obesity group were: 0% U, 3% N patients, 3% O patients, 5% OI, 4% OII, and 6% for OIII patients. The total surgery costs by obesity group were: $48,757.86 U, $49,688.52 N, $47,219.93 O, $50,467.66 OI, $51,189.47 OII, and $53,855.79 OIII. In an analysis of patients with baseline and 1 Y EQ5D follow-up, the cost per QALY by obesity group was: $153,737.78 U, $229,222.37 N, $290,361.68 O, $493,588.47 OI, $327,876.21 OII, and $171,680.00 OIII. If that benefit was sustained to life expectancy, the cost per QALY was $8,588.70 U, $12,805.72 N, $16,221.32 O, $27,574.77 OI, $18,317.11 OII, and $9,591.06 for OIII. CONCLUSIONSAmong adult spinal deformity patients, those with BMIs in the obesity I, obesity II, or obesity class III range had more expensive total surgery costs. When assessing 1 year cost per QALY, obese patients had costs 32% higher than nonobese patients ($224,440.61 vs. $331,048.23). Further research is warranted on the utility of optimizing modifiable preoperative health factors for patients undergoing corrective adult spinal deformity surgery.

STUDI KOMPARATIF USAHATANI BUAH NAGA GOOD AGRICULTURE PRACTICES DAN NON GOOD AGRICULTURE PRACTICES DI DESA JAMBEWANGI, BANYUWANGI

The study was aimed to: (1) The consideration of farmers are applied GAP and Non-GAP in dragon fruit farming. (2) Determine factors which influenced dragon fruit production in GAP and Non-GAP. (3) The cost efficiency between GAP and Non-GAP dragon fruit farming. Descriptive analysis, quadratic function, and independent sample t-test are employed to determine the objective of the research. The study showed that: (1) There were some considerations in applying the GAP of dragon fruit farming such the higher selling price to collectors, the affordable manure and fungicide costs, and eco-friendly. Meanwhile, the consideration of farmers in applying Non-GAP of dragon fruit farming was the larger size of fruit, the higher excitement of the consumers, and it was easier to obtain fungicide and manure. (2) In GAP farming number of plants, organic manure and labor force were significantly influenced toward dragon fruit’s production. While cropland acreage and fungicide had no a significant effect. In the other side, dragon fruit’s production in Non-GAP farming was significantly influenced by number of plants, organic manure, and labor force. While cropland acreage, plant lifetime, anorganic manure, fungicide, and growth hormone substances had no a significant effect. (3) The independent sample t-test analysis showed the significant value (sig. 2-tailed) had 0,000 &lt; α (0,05), it means that there were significant differences in cost efficiency between GAP and Non-GAP.

Production Costs, Inefficiency, and Source Water Quality: A Stochastic Cost Frontier Analysis of Canadian Water Utilities

This analysis employs a stochastic cost frontier to estimate relationships between source water quality, production costs, and cost efficiency in Canadian municipal water treatment facilities. Data for the analysis are obtained primarily from a census of water providers that contains detailed information on operational costs, source water quality, and treatment technologies. Results show water quality, as measured by turbidity, is a significant determinant of production costs. The estimated elasticity for turbidity is 0.1, with a 95% confidence interval of 0.06 to 0.14. We find no significant differences in cost efficiency across regions, treatment technologies, output, or turbidity levels.

Testing for cost efficiency differences between two groups of rural hospitals

Critical Access Hospitals (CAHs) receive cost-based reimbursement for services provided to Medicare patients, while the prospective payment system (PPS) pays non-CAH rural hospitals a fixed price per case. However, the two reimbursement models may provide different incentives for hospitals. The PPS may motivate hospitals to keep their unit costs below the reimbursement rates in order to make profits. Cost-based reimbursement, which pays CAHs for the total cost of services, may provide a disincentive for cost control. We statistically test the hypothesis that CAHs are less cost efficient than non-CAH rural hospitals. Recent methodological advancements as well as traditional approaches were used with 3 years of data jointly to assess cost efficiency differences between the two groups of rural hospitals. Data envelopment analysis (DEA) showed that, on average, CAHs were less cost efficient than non-CAH rural hospitals. Density analysis of DEA cost efficiency scores also showed that CAHs were less cost efficient than non-CAH rural hospitals. Marginal effects of environmental variables, estimated using bootstrapped truncated regression, tobit, and stochastic frontier analysis, suggested that CAHs were less cost efficient than non-CAH rural hospitals, although tobit showed statistical insignificance. Overall, the results of our analysis support the hypothesis that CAHs are less cost efficient than non-CAH rural hospitals.

Cost efficiency in Swedish public transport

Over the last couple of years, costs in Swedish public transport have increased substantially, and there is little knowledge in what affects cost efficiency. This study aims at determining how different contractual and environmental factors affect cost efficiency, and whether cost efficiency differs between Public Transport Authorities (PTA). A stochastic frontier analysis is conducted using contract-level data for the 21 PTAs and year 2013. The main findings are that cost efficiency is lower if a contract is operating in areas with high population density, or if the traffic is supplied by a publicly owned operator without using competitive tendering. Furthermore, no major differences in cost efficiency are found across PTAs, with the exception of the counties of Stockholm and Skåne, both counties with high population density, and the county of Västmanland, where all public transport is provided without competitive tendering. The finding of lower cost efficiency in high-density areas calls for further investigation into why this is. Potential explanations are the need for higher peak capacity, or more complex transportation systems. Finally, usage of direct-awarding of public transport should be clearly motivated, as this affects cost efficiency negatively.

Hiệu quả sản xuất của các hộ nuôi cá tra (Pangasianodon hypophthalmus) ở tỉnh An Giang

This research was conducted based on a survey of 66 Pangasius farming households (PFHs) in Chau Phu and Phu Tan districts of An Giang province, using the method of Stochastic Frontier Analysis (SFA) in order to measure Pangasius farming households’ cost efficiency. The result indicated that the mean cost efficiency of PFHs was 71%, and that there were differences in cost efficiency among these households. The result obtained from this research also recognized that using certified fingerlings and raisers’ high level of education had a significantly positive impact on PFHs’ cost efficiency. Therefore, appropriate policies towards an increase in supply amount of certified fingerlings are considered as necessary to improve PFHs’ cost efficiency in An Giang.

Efficiency and regulation: a comparison of dairy farms in Ontario and New York State

We study the cost efficiency of dairy farms operating under two different regulatory regimes. While neo-classical economic theory suggests that farms should maximize their efficiency regardless of their regulatory system, we find that farms operating in a more regulated environment have, on average, a lower cost efficiency. Differences in cost efficiency are primarily explained by allocative decisions—farms in the more regulated environment are overcapitalized and overly reliant on homegrown feed. Efficiency is estimated using bootstrapped data envelopment analysis and a stochastic distance function. We discuss the implications of these results for welfare and policy.

Cost efficiency of the banking industry and unilateral euroisation: A stochastic frontier approach in Serbia and Montenegro

This paper aims at investigating the differences in cost efficiency of the banking industry in Serbia and Montenegro over the period 2005–2012. These two countries operated under a common monetary regime until 1999 and followed two different monetary regimes thereafter: unilateral euroisation in Montenegro and monetary independence in Serbia. A stochastic frontier approach incorporating bank-specific and country-related variables is used to analyze cost efficiency in the banking sectors of Serbia and Montenegro. The analysis shows that a bank operating at given conditions in terms of ownership, market and other specific characteristics presents significantly higher cost efficiency if it operates in Montenegro rather than in Serbia. We argue that this result may relate to the choice of unilateral euroisation made by Montenegro. It is also shown that foreign-owned banks, higher capitalized banks and banks with lower non-performing loans operate at higher cost efficiency.

An Examination of Banks’ Cost Efficiency in Central and Eastern Europe

Abstract Using a heteroscedastic stochastic frontier model, we will investigate the commercial banks cost efficiency differences in six emerging countries from Central and Eastern Europe over the period 2005 to 2011. Also, we will highlight the determinants of banks cost efficiency. Our analysis is important because, the efficiency of commercial banks became essential for banks stability. The results showed that a high macroeconomic stability supports the efficiency of commercial banks. Also, banks which undertake higher risks are more inefficient. Therefore, banks with less liquidity, with a lower solvency rate and a higher credit risk are more inefficient than more cautious credit institutions. By analyzing the evolution of the cost index, we have noticed that the banks from all the banking systems included in our study managed to increase the level of efficiency until 2008. The year 2009 brought upon it a decrease of the efficiency for the banks from Poland, Romania, Russia and Hungary. At the same time, for the banks from Bulgaria and the Czech Republic we can notice a stagnation of the efficiency index.

Effect of Internationalization on the Cost Efficiency of Taiwan’s Banks

:We focus on the effect of internationalization on the cost efficiency of banks by studying Taiwan as a sample for developing countries. We find that (1) increasing overseas businesses and foreign exchange deposits increases cost efficiency; (2) expanding offshore banking units increases bank efficiency; and (3) the profitability of a bank’s overseas branch is not a critical factor behind the differences in cost efficiency across both financial holding company (FHC) banks and non-financial holding company (non-FHC) banks. Finally, our metafrontier empirical results illustrate that FHC banks in Taiwan show better technical performance in cost control than non-FHC banks.

Economic incentives in the hospice care setting: A comparison of for-profit and nonprofit providers

We examine the association of for-profit (FP) and nonprofit (NP) economic incentives in hospice care providers with financial and nonfinancial metrics of management performance. Controlling for quality of patient care and differences in cost-efficiency, we find that FP providers (1) selectively admit patients with longer life-prognoses and billable days and hence lower average costs per day, (2) employ a lower average cost/skill mix of workers, and (3) have higher CEO compensation and profit. The NP providers admit more patients with the less profitable life-prognoses attributes, have lower CEO compensation, and reinvest their net earnings under the non-distribution constraint. While the profit incentive may be needed to attract providers into this rapidly growing and underserved market, the NP providers return a lower cost per patient served from the taxpayer's perspective.

Cost Efficiency and the Choice of Operation Type: Evidence from Taiwan's International Tourist Hotels

This study investigated the endogenous relationship between the differences in cost efficiency and hotel owners' choices of either remaining an independently operated establishment or joining an international chain. We applied observations of 72 international tourist hotels in Taiwan from 1997 to 2008 to a simultaneous equations model with qualitative and limited dependent variables. The study results suggest that joining international chains significantly improves cost efficiency. We also found that net gains from improving both cost efficiency and hotel location are the two foremost determinants for an owner's decision to join an international hotel chain.

Cost-efficiency in packaging waste management: The case of Belgium

In order to exploit economies of scale Belgian municipalities regularly cooperate in the provision of waste related services. In particular for the collection and separation of household packaging waste, municipalities appear to seek technical and cost efficiency gains by cooperating via municipal waste joint ventures. Although most Belgian municipal waste joint ventures can present excellent recycling and recovery rates for household packaging waste, their performance in terms of cost-efficiency has never been assessed. Using a unique dataset comprising of the costs for all 35 Belgian municipal waste joint ventures in 2010, this paper present the first assessment of the cost efficiency of household packaging waste collection in Belgium. As we are not sure on the relative importance of the separate cost efficiency scores for the three selectively collected household packaging waste fractions when determining the overall cost efficiency, this paper draws on the Benefit-of-the-Doubt approach. Our results indicate that, despite the substantial cooperation between municipalities, still considerable differences in cost efficiency for household packaging waste collection exist.

Russian Banking: The Impact of Ownership on Efficiency and Performance

This paper analyses the development of the Russian banking sector over the period 2001-2007 to assess the impact of ownership on the operations of commercial banks. The stochastic frontier approach is employed for a sample of the 50 largest Russian banks to determine cost efficiency differences between foreign-owned, domestic private and state-owned banks. We find that cost efficiency of the Russian banking market decreased over the observed period if technical change is taken into account. The estimation results further suggest that foreign banks are more efficient than state-owned banks, and state-owned banks achieve higher efficiency levels than private domestic banks. These results are consistent with the development of the market share of private domestic banks after the crisis. Finally the lower efficiency of the private segment of the Russian banking sector seems to be due to the higher interest rates, which private banks have to pay for their deposits.