Developing foreign bank efficiency models for DEA grounded in finance theory

We develop foreign bank technical, cost and profit efficiency models for particular application with data envelopment analysis (DEA). Key motivations for the paper are (a) the often-observed practice of choosing inputs and outputs where the selection process is poorly explained and linkages to theory are unclear, and (b) foreign bank productivity analysis, which has been neglected in DEA banking literature. The main aim is to demonstrate a process grounded in finance and banking theories for developing bank efficiency models, which can bring comparability and direction to empirical productivity studies. We expect this paper to foster empirical bank productivity studies.

A methodology for analysis of sugarcane productivity trends - 2. Comparing variety trials with commercial productivity

Previous research has reported both agreements and serious anomalies in relationships between production attributes of sugarcane varieties in variety trials (VTs) and commercial production (CP). This paper examines VT and CP data for tonnes of cane per hectare (TCH) and sugar content (CCS). Data, analysed by REML, included 107 VTs and 54 CP mill years for 9 varieties from the mill districts of Mulgrave, Babinda, and Tully for harvest years 1982-99. Important consistencies included high TCH of Q152, high CCS of Q117 and Q120, and low CCS of H56-752. Significant anomalies existed with respect to TCH for Q113, Q117, Q120, Q122, Q138, and H56-752 and to CCS for Q113 and Q124. Investigation of these anomalies was assisted by access to independent REML analyses of CP data for 65692 individual Tully cane blocks from 1988 to 1999 and by the knowledge of persons familiar with the preferential uses of varieties by farmers. Minor anomalies were due to limited year or mill area data. Q124 TCH was deemed to be decreased and its CCS increased by severe disease in Babinda CP in the extremely wet 1998 and 1999 seasons. Other serious anomalies have credible but unsubstantiated explanations. The most convincing, for Q113, Q117, Q138, and H56-752, are that these varieties were deployed unevenly with regard to late season harvesting, predominant use or avoidance on high fertility soils, or use confined to low fertility sandy soils, respectively. Uneven deployment results in confounding of these effects in the varietal CP statistics at mill area level. It is concluded that VTs cannot be enhanced to anticipate or evaluate most effects of uneven deployment. They give adequate predictions of relative CP performance for varieties deployed evenly across confounding influences. Routine analyses of individual block CP data would be useful and enhanced by addition of relevant information to the block records.

Assessing the performance of a nucleus estate and smallholder scheme for oil palm production in West Sumatra: a stochastic frontier analysis

In this paper, we study the performance of smallholders in a nucleus estate and smallholder (NES) scheme in oil palm production schemein West Sumatra by measuring their technical efficiency using a stochastic frontier production function. Our results indicate a mean technical efficiency of 66%, which is below what we would have expected given the uniformity of the climate, soils and plantation construction among the sample farmers. The use of progressive farmers as a means of disseminating extension advice does not appear to have been successful, and more rigorous farmer selection procedures need to be put in place for similar schemes and for general agricultural extension in future. No clear relationship was established between technical efficiency and the use of female labour, suggesting there is no need to target extension services specifically at female labourers in the household. Finally, education was found to have an unexpectedly negative impact on technical efficiency, indicating that farmers with primary education may be more important than those with secondary and tertiary education as targets of development schemes and extension programs entailing non-formal education. (C) 2003 Elsevier Ltd. All rights reserved.

The productivity-inflation nexus: The case of the Australian mining sector

This paper examines the causal links between productivity growth and two price series given by domestic inflation and the price of mineral products in Australia's mining sector for the period 1968/1969 to 1997/1998. The study also uses a stochastic translog cost frontier to generate improved estimates of total factor productivity (TFP) growth. The results indicate negative unidirectional causality running from both price series to mining productivity growth. Regression analysis further shows that domestic inflation has a small but adverse effect on mining productivity growth, thus providing some empirical support for Australia's 'inflation first' monetary policy, at least with respect to the mining sector. Inflation in mineral price, on the other hand, has a greater negative effect on mining productivity growth via mineral export growth.

Relationships of Efficiency to Reproductive Disorders in Danish Milk Production: A Stochastic Frontier Analysis

Relationships of various reproductive disorders and milk production performance of Danish dairy farms were investigated. A stochastic frontier production function was estimated using data collected in 1998 from 514 Danish dairy farms. Measures of farm-level milk production efficiency relative to this production frontier were obtained, and relationships between milk production efficiency and the incidence risk of reproductive disorders were examined. There were moderate positive relationships between milk production efficiency and retained placenta, induction of estrus, uterine infections, ovarian cysts, and induction of birth. Inclusion of reproductive management variables showed that these moderate relationships disappeared, but directions of coefficients for almost all those variables remained the same. Dystocia showed a weak negative correlation with milk production efficiency. Farms that were mainly managed by young farmers had the highest average efficiency scores. The estimated milk losses due to inefficiency averaged 1142, 488, and 256 kg of energy-corrected milk per cow, respectively, for low-, medium-, and high-efficiency herds. It is concluded that the availability of younger cows, which enabled farmers to replace cows with reproductive disorders, contributed to high cow productivity in efficient farms. Thus, a high replacement rate more than compensates for the possible negative effect of reproductive disorders. The use of frontier production and efficiency/ inefficiency functions to analyze herd data may enable dairy advisors to identify inefficient herds and to simulate the effect of alternative management procedures on the individual herd's efficiency.

Using DEA [data envelopment analysis] in benchmarking

Australian banks are currently generating huge profits but are they sustainable? NECMI AVKIRAN suggests that banks will need to scrutinise the performance of their networks to ensure future profits.

Is there a case for low inflation-induced productivity growth in selected Asian economies?

The authors examine the evidence on the relationship between inflation and productivity growth for nine Asian economies using causality analysis in a multivariate model with money supply as a possible effective monetary policy tool. The inflation-productivity growth relationship is found to be non-uniform, as the evidence of uni-directional, bi-directional, and no causality between the two variables is varied and significant for some countries and insignificant for others. An attempt is made to explain the inflation-productivity nexus for these countries and to discuss implications for anti-inflationary policies such as inflation targeting.

The productivity effects of cattle tick (Boophilus microplus) infestation on cattle, with particular reference to Bos indicus cattle and their crosses

In response to uncertainty among cattle producers in Australia regarding the need to treat Bos indices and B. indicus crossbreeds, the scientific literature relating to the productivity effects of Boophilus microplus on cattle of all breeds was reviewed. Estimates of the mean effect of each engorging tick (damage coefficient, d) were made from a simple analysis of the reported data. On average, each engorging female tick is responsible for the loss of 1.37 +/- 0.25 g bodyweight in B. taunts cattle. The comparable value for B. taurus x B. indicus cattle is 1.18 +/- 0.21 g/engorging tick. These values were not statistically significantly different, indicating that if a threshold approach to tick control were taken, then the threshold number of standard ticks would be the same regardless of cattle genotype. No studies provided useable estimates of the effect of tick infestation on pure B. indices cattle. An economic threshold for treatment, below which acaricide application is not beneficial, can be predicted, using known values for the cost of acaricide application and the price of beef. However, the application of a threshold approach to control has not been embraced by government advisers and runs contrary to the accepted principals of strategic control programs. (C) 2006 Elsevier B.V. All rights reserved.