IDEAS home Printed from https://ideas.repec.org/a/eee/ecmode/v27y2010i3p697-704.html
   My bibliography  Save this article

Estimating semi-parametric output distance functions with neural-based reduced form equations using LIML

Author

Listed:
  • Vouldis, Angelos T.
  • Michaelides, Panayotis G.
  • Tsionas, Efthymios G.

Abstract

Efficiency analysis is an important tool for evaluating firms' performance. This paper introduces a novel approach for measuring technical efficiency (TE) in the case of technologies with multiple outputs which deals with the endogeneity of outputs issue. The proposed approach uses Artificial Neural Networks (ANNs) and the method of Limited Information Maximum Likelihood (LIML). The validity of the proposed approach is illustrated by fitting it to a large US data set for all commercial banks in the 1989-2000 time span. Meanwhile, we compare the proposed approach to the single-equation Translog output distance function and the proposed approach was found to yield very satisfactory results, while dealing with the issue of the endogeneity of outputs.

Suggested Citation

  • Vouldis, Angelos T. & Michaelides, Panayotis G. & Tsionas, Efthymios G., 2010. "Estimating semi-parametric output distance functions with neural-based reduced form equations using LIML," Economic Modelling, Elsevier, vol. 27(3), pages 697-704, May.
  • Handle: RePEc:eee:ecmode:v:27:y:2010:i:3:p:697-704
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264-9993(10)00010-6
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Briec, Walter & Kerstens, Kristiaan, 2009. "The Luenberger productivity indicator: An economic specification leading to infeasibilities," Economic Modelling, Elsevier, vol. 26(3), pages 597-600, May.
    2. O'Donnell, Christopher J. & Coelli, Timothy J., 2005. "A Bayesian approach to imposing curvature on distance functions," Journal of Econometrics, Elsevier, vol. 126(2), pages 493-523, June.
    3. Kumbhakar, Subal C. & Tsionas, Efthymios G., 2005. "Measuring technical and allocative inefficiency in the translog cost system: a Bayesian approach," Journal of Econometrics, Elsevier, vol. 126(2), pages 355-384, June.
    4. Badunenko, Oleg & Fritsch, Michael & Stephan, Andreas, 2008. "Allocative efficiency measurement revisited--Do we really need input prices?," Economic Modelling, Elsevier, vol. 25(5), pages 1093-1109, September.
    5. Hutchinson, James M & Lo, Andrew W & Poggio, Tomaso, 1994. " A Nonparametric Approach to Pricing and Hedging Derivative Securities via Learning Networks," Journal of Finance, American Finance Association, vol. 49(3), pages 851-889, July.
    6. Grosskopf, S. & Margaritis, D. & Valdmanis, V., 1995. "Estimating output substitutability of hospital services: A distance function approach," European Journal of Operational Research, Elsevier, vol. 80(3), pages 575-587, February.
    7. Bernhard Brümmer & Thomas Glauben & Geert Thijssen, 2002. "Decomposition of Productivity Growth Using Distance Functions: The Case of Dairy Farms in Three European Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 628-644.
    8. Kumbhakar, Subal C. & Tsionas, Efthymios G., 2006. "Estimation of stochastic frontier production functions with input-oriented technical efficiency," Journal of Econometrics, Elsevier, vol. 133(1), pages 71-96, July.
    9. Kaparakis, Emmanuel I & Miller, Stephen M & Noulas, Athanasios G, 1994. "Short-Run Cost Inefficiency of Commercial Banks: A Flexible Stochastic Frontier Approach," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(4), pages 875-893, November.
    10. Efthymios G. Tsionas, 2002. "Stochastic frontier models with random coefficients," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 17(2), pages 127-147.
    11. Boussemart, Jean-Philippe & Briec, Walter & Cadoret, Isablelle & Tavera, Christophe, 2006. "A re-examination of the technological catching-up hypothesis across OECD industries," Economic Modelling, Elsevier, vol. 23(6), pages 967-977, December.
    12. Efthymios G. Tsionas & Subal C. Kumbhakar, 2004. "Markov switching stochastic frontier model," Econometrics Journal, Royal Economic Society, vol. 7(2), pages 398-425, December.
    13. Tim Coelli & Sergio Perelman, 2000. "Technical efficiency of European railways: a distance function approach," Applied Economics, Taylor & Francis Journals, vol. 32(15), pages 1967-1976.
    14. Tim Hill & Marcus O'Connor & William Remus, 1996. "Neural Network Models for Time Series Forecasts," Management Science, INFORMS, vol. 42(7), pages 1082-1092, July.
    15. Daniel Santin & Francisco Delgado & Aurelia Valino, 2004. "The measurement of technical efficiency: a neural network approach," Applied Economics, Taylor & Francis Journals, vol. 36(6), pages 627-635.
    16. Fleissig, Adrian R. & Kastens, Terry & Terrell, Dek, 2000. "Evaluating the semi-nonparametric fourier, aim, and neural networks cost functions," Economics Letters, Elsevier, vol. 68(3), pages 235-244, September.
    17. Managi, Shunsuke & Kumar, Surender, 2009. "Trade-induced technological change: Analyzing economic and environmental outcomes," Economic Modelling, Elsevier, vol. 26(3), pages 721-732, May.
    18. Rezitis, Anthony N., 2008. "Efficiency and productivity effects of bank mergers: Evidence from the Greek banking industry," Economic Modelling, Elsevier, vol. 25(2), pages 236-254, March.
    19. Coelli, Tim & Perelman, Sergio, 1999. "A comparison of parametric and non-parametric distance functions: With application to European railways," European Journal of Operational Research, Elsevier, vol. 117(2), pages 326-339, September.
    20. Kumbhakar, Subal C. & Tsionas, Efthymios G., 2005. "The Joint Measurement of Technical and Allocative Inefficiencies: An Application of Bayesian Inference in Nonlinear Random-Effects Models," Journal of the American Statistical Association, American Statistical Association, vol. 100, pages 736-747, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liao, Jui-Jung & Shih, Ching-Hui & Chen, Tai-Feng & Hsu, Ming-Fu, 2014. "An ensemble-based model for two-class imbalanced financial problem," Economic Modelling, Elsevier, vol. 37(C), pages 175-183.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:27:y:2010:i:3:p:697-704. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.