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Malmquist-type indices in the presence of negative data: An application to bank branches

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  • Portela, Maria C.A.S.
  • Thanassoulis, Emmanuel

Abstract

In this paper we develop an index and an indicator of productivity change that can be used with negative data. For that purpose the range directional model (RDM), a particular case of the directional distance function, is used for computing efficiency in the presence of negative data. We use RDM efficiency measures to arrive at a Malmquist-type index, which can reflect productivity change, and we use RDM inefficiency measures to arrive at a Luenberger productivity indicator, and relate the two. The productivity index and indicator are developed relative to a fixed meta-technology and so they are referred to as a meta-Malmquist index and meta-Luenberger indicator. We also address the fact that VRS technologies are used for computing the productivity index and indicator (a requirement under negative data), which raises issues relating to the interpretability of the index. We illustrate how the meta-Malmquist index can be used, not only for comparing the performance of a unit in two time periods, but also for comparing the performance of two different units at the same or different time periods. The proposed approach is then applied to a sample of bank branches where negative data were involved. The paper shows how the approach yields information from a variety of perspectives on performance which management can use.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Banking & Finance.

Volume (Year): 34 (2010)
Issue (Month): 7 (July)
Pages: 1472-1483

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Handle: RePEc:eee:jbfina:v:34:y:2010:i:7:p:1472-1483

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Web page: http://www.elsevier.com/locate/jbf

Related research

Keywords: Directional distance functions Negative data in DEA Malmquist indices Luenberger indicators Meta-frontier Bank branches DEA;

References

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Citations

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Cited by:
  1. Javier E. Pirateque & José H. Piñeros & Linda Mondragón, 2013. "Eficiencia de los establecimientos bancarios (EB): una aproximación mediante modelos DEA," Borradores de Economia 798, Banco de la Republica de Colombia.
  2. Paradi, Joseph C. & Zhu, Haiyan, 2013. "A survey on bank branch efficiency and performance research with data envelopment analysis," Omega, Elsevier, vol. 41(1), pages 61-79.
  3. M. Portela & A. Camanho & A. Keshvari, 2013. "Assessing the evolution of school performance and value-added: trends over four years," Journal of Productivity Analysis, Springer, vol. 39(1), pages 1-14, February.
  4. Giraleas, Dimitris & Emrouznejad, Ali & Thanassoulis, Emmanuel, 2011. "Productivity change using growth accounting and frontier-based approaches – Evidence from a Monte Carlo analysis," MPRA Paper 37429, University Library of Munich, Germany.
  5. Eskelinen, Juha & Kuosmanen, Timo, 2013. "Intertemporal efficiency analysis of sales teams of a bank: Stochastic semi-nonparametric approach," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 5163-5175.
  6. Sahoo, Biresh K. & Mehdiloozad, Mahmood & Tone, Kaoru, 2014. "Cost, revenue and profit efficiency measurement in DEA: A directional distance function approach," European Journal of Operational Research, Elsevier, vol. 237(3), pages 921-931.
  7. Giraleas, Dimitris & Emrouznejad, Ali & Thanassoulis, Emmanuel, 2012. "Selecting between different productivity measurement approaches: An application using EU KLEMS data," MPRA Paper 37965, University Library of Munich, Germany.
  8. Javier E. Pirateque & José H. Piñeros & Linda Mondragón, 2013. "Eficiencia de los establecimientos bancarios (EB): una aproximación mediante modelos DEA," BORRADORES DE ECONOMIA 011103, BANCO DE LA REPÚBLICA.
  9. Sombat Singkharat & Aree Wiboonpongse & Yaovarate Chaovanapoonphol, 2012. "Efficiency of improved peeled longan drying technology in Thailand: A metafrontier approach," The Empirical Econometrics and Quantitative Economics Letters, Faculty of Economics, Chiang Mai University, vol. 1(3), pages 19-32, September.
  10. Giraleas, Dimitris & Emrouznejad, Ali & Thanassoulis, Emmanuel, 2012. "Productivity change using growth accounting and frontier-based approaches – Evidence from a Monte Carlo analysis," European Journal of Operational Research, Elsevier, vol. 222(3), pages 673-683.
  11. Wheelock, David C. & Wilson, Paul W., 2013. "The evolution of cost-productivity and efficiency among US credit unions," Journal of Banking & Finance, Elsevier, vol. 37(1), pages 75-88.

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