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The issue of input/output slacks in validating data envelopment analysis-based Malmquist productivity index: an example from banking

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  • Parakramaweera Sunil Dharmapala

Abstract

Data envelopment analysis (DEA) models have been used in formulating the Malmquist index to measure productivity change over time periods. In this article, we question the validity of this index in the presence of input/output slacks that appear in DEA models used. We demonstrate with an application to banking that Malmquist index loses its meaning whenever slacks are present. As a corrective method, to neutralise the effect of slacks, we propose intrinsic assurance regions to be appended to the DEA models.

Suggested Citation

  • Parakramaweera Sunil Dharmapala, 2010. "The issue of input/output slacks in validating data envelopment analysis-based Malmquist productivity index: an example from banking," International Journal of Mathematics in Operational Research, Inderscience Enterprises Ltd, vol. 2(3), pages 302-319.
    • Handle: RePEc:ids:ijmore:v:2:y:2010:i:3:p:302-319
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    Citations

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    Cited by:

    1. Aparicio, Juan & Pastor, Jesus T. & Zofio, Jose L., 2013. "On the inconsistency of the Malmquist–Luenberger index," European Journal of Operational Research, Elsevier, vol. 229(3), pages 738-742.
    2. Emrouznejad, Ali & Yang, Guo-liang, 2016. "CO2 emissions reduction of Chinese light manufacturing industries: A novel RAM-based global Malmquist–Luenberger productivity index," Energy Policy, Elsevier, vol. 96(C), pages 397-410.

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