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Bad loans and efficiency in Italian Banks

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Author Info

  • Paola Dongili

    ()
    (Dipartimento di Scienze economiche (Università di Verona))

  • Angelo Zago

    ()
    (Dipartimento di Scienze economiche (Università di Verona))

Abstract

The problem of taking into account the quality attributes of different goods has a long tradition in economics A strand of literature deals with the environmental impacts in the measurement of efficiency and productivity growth. Färe et al. (1989) indeed started what has become now a relatively vast literature extending efficiency measurement when some outputs are undesirable. The central notion of this paper is that of weak disposability of outputs. To credit firms for their effort to cut off on pollutants, technology is modeled so that it can handle the case when the reduction of some (bad) outputs requires the reduction of some of the other outputs and/or the increase of inputs.Besides the concept of output weak disposability, an interesting and useful idea for this setting is the directional distance function, a generalization of the radial distance function introduced to production economics by Chambers, Chung and Färe (1996). In this fashion it is possible to evaluate the performance of the firms that need to increase the production of the good outputs and decrease that bad outputs.

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Bibliographic Info

Paper provided by University of Verona, Department of Economics in its series Working Papers with number 28.

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Length: 29
Date of creation: Sep 2005
Date of revision:
Handle: RePEc:ver:wpaper:28

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Citations

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Cited by:
  1. Bonanno, Graziella, 2012. "L’efficienza del sistema bancario italiano dal 2006 al 2010. Un’applicazione delle frontiere stocastiche
    [The Efficiency of Italian Banking System over 2006-2010. An Application of the Stochast
    ," MPRA Paper 42831, University Library of Munich, Germany.
  2. Shen, Chung-Hua & Chen, Ting-Hsuan, 2010. "Estimating banking cost efficiency with the consideration of cost management," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(4), pages 424-435, November.
  3. Francesco Aiello & Graziella Bonanno, 2013. "Profit and cost efficiency in the Italian banking industry (2006-2011)," Economics and Business Letters, Oviedo University Press, vol. 2(4).

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