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Non-parametric, unconditional quantile estimation for efficiency analysis with an application to Federal Reserve check processing operations

  • Wheelock, David C.
  • Wilson, Paul W.

This paper examines the technical efficiency of U.S. Federal Reserve check processing offices over 1980–2003. We extend results from Park et al. (2000) and Daouia and Simar (2007) to develop an unconditional, hyperbolic, a-quantile estimator of efficiency. Our new estimator is fully non-parametric and robust with respect to outliers; when used to estimate distance to quantiles lying close to the full frontier, it is strongly consistent and converges at rate root-n, thus avoiding the curse of dimensionality that plagues data envelopment analysis (DEA) estimators. Our methods could be used by policymakers to compare inefficiency levels across offices or by managers of individual offices to identify peer offices.

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Article provided by Elsevier in its journal Journal of Econometrics.

Volume (Year): 145 (2008)
Issue (Month): 1-2 (July)
Pages: 209-225

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Handle: RePEc:eee:econom:v:145:y:2008:i:1-2:p:209-225
Contact details of provider: Web page: http://www.elsevier.com/locate/jeconom

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  7. Gilbert, R. Alton & Wheelock, David C. & Wilson, Paul W., 2004. "New evidence on the Fed's productivity in providing payments services," Journal of Banking & Finance, Elsevier, vol. 28(9), pages 2175-2190, September.
  8. Léopold Simar, 2003. "Detecting Outliers in Frontier Models: A Simple Approach," Journal of Productivity Analysis, Springer, vol. 20(3), pages 391-424, November.
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  18. Bauer, Paul W. & Hancock, Diana, 1993. "The efficiency of the Federal Reserve in providing check processing services," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 287-311, April.
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