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Hyperbolic Efficiency and Parametric Distance Functions: With Application to Spanish Savings Banks

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Author Info

  • Rafael Cuesta

    ()

  • José Zofío

    ()

Abstract

Distance functions are gaining relevance as alternative representations of production technologies, with growing numbers of empirical applications being made in the productivity and efficiency field. Distance functions were initially defined on the input or output production possibility sets by Shephard (1953, 1970) and extended to a graph representation of the technology by Färe, Grosskopf and Lovell (1985) through their graph hyperbolic distance function. Since then, different techniques such as non parametric-DEA and parametric-SFA have been used to calculate these distance functions. However, in the latter case we know of no study in which the restriction to input or output orientation has been relaxed. What we propose is to overcome such restrictiveness on dimensionality by defining and estimating a parametric hyperbolic distance function which simultaneously allows for the maximum equiproportionate expansion of outputs and reduction of inputs. In particular, we introduce a translog hyperbolic specification that complies with the conventional properties that the hyperbolic distance function satisfies. Finally, to illustrate its applicability in efficiency analysis we implement it using a data set of Spanish savings banks. Copyright Springer Science+Business Media, Inc. 2005

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File URL: http://hdl.handle.net/10.1007/s11123-005-3039-3
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Bibliographic Info

Article provided by Springer in its journal Journal of Productivity Analysis.

Volume (Year): 24 (2005)
Issue (Month): 1 (09)
Pages: 31-48

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Handle: RePEc:kap:jproda:v:24:y:2005:i:1:p:31-48

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Web page: http://www.springerlink.com/link.asp?id=100296

Related research

Keywords: production frontiers; parametric distance functions; hyperbolic efficiency; banking efficiency;

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Cited by:
  1. Alessandro Manello, 2011. "Environment and economic efficiency: an analysis of some polluting Italian industries," CERIS Working Paper 201103, Institute for Economic Research on Firms and Growth - Moncalieri (TO).
  2. Chris (Hristos) Doucouliagos & Malcolm Abbott, 2007. "Competition and Efficiency: Overseas students and technical efficiency in Australian and New Zealand Universities," Economics Series 2007_09, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  3. Kumbhakar, Subal C., 2013. "Specification and estimation of multiple output technologies: A primal approach," European Journal of Operational Research, Elsevier, vol. 231(2), pages 465-473.
  4. Yang, Mian & Yang, Fu-Xia & Chen, Xing-Peng, 2011. "Effects of substituting energy with capital on China's aggregated energy and environmental efficiency," Energy Policy, Elsevier, vol. 39(10), pages 6065-6072, October.
  5. Daehoon Nahm & Ha Vu, 2013. "Measuring scale efficiency from a parametric hyperbolic distance function," Journal of Productivity Analysis, Springer, vol. 39(1), pages 83-88, February.
  6. Balcombe, Kelvin George & Doucouliagos, Hristos & Fraser, Iain, 2007. "Input usage, output mix and industry deregulation: an analysis of the Australian dairy manufacturing industry," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(2), June.
  7. Mehdiloozad, Mahmood & Sahoo, Biresh K. & Roshdi, Israfil, 2014. "A generalized multiplicative directional distance function for efficiency measurement in DEA," European Journal of Operational Research, Elsevier, vol. 232(3), pages 679-688.
  8. Cuesta, Rafael A. & Lovell, C.A. Knox & Zofío, José L., 2009. "Environmental efficiency measurement with translog distance functions: A parametric approach," Ecological Economics, Elsevier, vol. 68(8-9), pages 2232-2242, June.

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