Rationalising Inefficiency: A Study of Canadian Bank Branches
AbstractMany studies have attempted to explain estimated inefficiency, for instance by bounded rationality, ignorance, lack of incentives or motivation etc. However, the presence of inefficiency remains in conflict with the neo-classical idea of economic rationality. This paper suggests ways in which the outcomes of Data Envelopment Analysis-type efficiency models can be rationalised. To illustrate the concepts we consider a data set of Canadian bank branches. The empirical results are encouraging since what appears to be inefficiency in some branches can be argued to be the outcome of rational decisions regarding resource allocation.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Industrial Economics Division in its series Occasional Papers with number 19.
Date of creation: 11 Jan 2006
Date of revision:
Contact details of provider:
Postal: Jubilee Campus, Wollaton Road, Nottingham, NG8 1BB
Phone: +44 (0) 115 84 66602
Fax: +44 (0) 115 84 66667
Web page: http://www.nottingham.ac.uk/business/Divisions/EconomicsFinance/
More information through EDIRC
Banking; Data Envelopment Analysis (DEA); Rationalising Inefficiency; Resource utilization; Allocation;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-11-12 (All new papers)
- NEP-BAN-2006-11-12 (Banking)
- NEP-BEC-2006-11-12 (Business Economics)
- NEP-EFF-2006-11-12 (Efficiency & Productivity)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Haskel, Jonathan & Sanchis, Amparo, 2000.
"A bargaining model of Farrell inefficiency,"
International Journal of Industrial Organization,
Elsevier, vol. 18(4), pages 539-556, May.
- Parish, Ross M & Ng, Yew-Kwang, 1972. "Monopoly, X-Efficiency and the Measurement of Welfare Loss," Economica, London School of Economics and Political Science, vol. 39(155), pages 301-08, August.
- Schaffnit, Claire & Rosen, Dan & Paradi, Joseph C., 1997. "Best practice analysis of bank branches: An application of DEA in a large Canadian bank," European Journal of Operational Research, Elsevier, vol. 98(2), pages 269-289, April.
- Haskel, Jonathan & Sanchis, Amparo, 1995.
"Privatisation and X-Inefficiency: A Bargaining Approach,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 43(3), pages 301-21, September.
- Haskel, Jonathan & Sanchis, Amparo, 1995. "Privatization and X-Inefficiency: A Bargaining Approach," CEPR Discussion Papers 1192, C.E.P.R. Discussion Papers.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Robert Hoffmann).
If references are entirely missing, you can add them using this form.