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Slack-based directional distance function in the presence of bad outputs: Theory and Application to Vietnamese Banking

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Abstract

In this paper we extend the slack-based directional distance function introduced by F ̈are and Grosskopf (2010) to measure efficiency in the presence of bad outputs and illustrate it through an application on data of Vietnamese commercial banks. We also compare results from the slack-based directional distance function relative to the directional distance function, the enhanced hyperbolic efficiency measure (F ̈are et al., 1989) and the Farrell-type technical efficiency and confirm that it has greater discriminative power.

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  • Manh D. Pham & Valentin Zelenyuk, 2016. "Slack-based directional distance function in the presence of bad outputs: Theory and Application to Vietnamese Banking," CEPA Working Papers Series WP072016, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uqcepa:117
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    2. Aparicio, Juan & Kapelko, Magdalena & Zofío, José L., 2020. "The measurement of environmental economic inefficiency with pollution-generating technologies," Resource and Energy Economics, Elsevier, vol. 62(C).
    3. Pham, Manh D. & Zelenyuk, Valentin, 2019. "Weak disposability in nonparametric production analysis: A new taxonomy of reference technology sets," European Journal of Operational Research, Elsevier, vol. 274(1), pages 186-198.
    4. Robin C. Sickles & Wonho Song & Valentin Zelenyuk, 2018. "Econometric Analysis of Productivity: Theory and Implementation in R," CEPA Working Papers Series WP082018, School of Economics, University of Queensland, Australia.
    5. Chen, Ya & Pan, Yongbin & Wang, Mengyuan & Ding, Tao & Zhou, Zhixiang & Wang, Ke, 2023. "How do industrial sectors contribute to carbon peaking and carbon neutrality goals? A heterogeneous energy efficiency analysis for Beijing," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 67-80.
    6. Fukuyama, Hirofumi & Matousek, Roman, 2018. "Nerlovian revenue inefficiency in a bank production context: Evidence from Shinkin banks," European Journal of Operational Research, Elsevier, vol. 271(1), pages 317-330.
    7. Tone, Kaoru & Toloo, Mehdi & Izadikhah, Mohammad, 2020. "A modified slacks-based measure of efficiency in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 287(2), pages 560-571.
    8. Huaqing Wu & Jingyu Yang & Wensheng Wu & Ya Chen, 2023. "Interest rate liberalization and bank efficiency: A DEA analysis of Chinese commercial banks," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 31(2), pages 467-498, June.
    9. Valentin Zelenyuk, 2021. "Performance Analysis: Economic Foundations & Trends," CEPA Working Papers Series WP162021, School of Economics, University of Queensland, Australia.
    10. West, Steele, 2021. "The Estimation of Farm Business Inefficiency in the Presence of Debt Repayment," 2021 Conference, August 17-31, 2021, Virtual 315048, International Association of Agricultural Economists.
    11. Javad Gerami & Mohammad Reza Mozaffari & P. F. Wanke & Henrique Correa, 2022. "A novel slacks-based model for efficiency and super-efficiency in DEA-R," Operational Research, Springer, vol. 22(4), pages 3373-3410, September.
    12. Subhash C. Ray & Kankana Mukherjee & Anand Venkatesh, 2018. "Nonparametric measures of efficiency in the presence of undesirable outputs: a by-production approach," Empirical Economics, Springer, vol. 54(1), pages 31-65, February.
    13. Zhu, Ning & Wu, Yanrui & Wang, Bing & Yu, Zhiqian, 2019. "Risk preference and efficiency in Chinese banking," China Economic Review, Elsevier, vol. 53(C), pages 324-341.

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    More about this item

    Keywords

    Banking; Bad outputs; Data Envelopment Analysis; Directional distance function; Slack-based efficiency; Performance analysis;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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