Derivation of marginal effects of determinants of technical inefficiency

In efficiency studies using the stochastic frontier approach, the main focus is to explain inefficiency in terms of some exogenous variables and computation of marginal effects of each of these determinants. Although inefficiency is estimated by its mean conditional on the composed error term (the Jondrow et al., 1982 estimator), the marginal effects are computed from the unconditional mean of inefficiency (Wang, 2002). In this paper we derive the marginal effects based on the Jondrow et al. estimator and use the bootstrap method to compute confidence intervals of the marginal effects.

Foreign manufacturing, regional agglomeration and technical efficiency in UK industries: a stochastic production frontier approach

The paper examines howfar foreign manufacturing investment in UK industries, together with the spatial agglomeration of those industries, affect technical efficiency. The paper links research on the estimation of technical efficiency,with those literatures demonstrating the economies associated with foreign direct investment and spatial agglomeration. The methodology involves estimation of a stochastic production frontier with random components associated with industry technical inefficiency, and a standard error. The paper also explores whether the degree of foreign involvement has a greater impact on technical efficiency where the domestic industry sector is characterized by comparatively high productivity and spatial agglomeration. The policy implications of the analysis are discussed.

Developing a decomposable measure of profit efficiency using DEA

In for-profit organizations efficiency measurement with reference to the potential for profit augmentation is particularly important as is its decomposition into technical, and allocative components. Different profit efficiency approaches can be found in the literature to measure and decompose overall profit efficiency. In this paper, we highlight some problems within existing approaches and propose a new measure of profit efficiency based on a geometric mean of input/output adjustments needed for maximizing profits. Overall profit efficiency is calculated through this efficiency measure and is decomposed into its technical and allocative components. Technical efficiency is calculated based on a non-oriented geometric distance function (GDF) that is able to incorporate all the sources of inefficiency, while allocative efficiency is retrieved residually. We also define a measure of profitability efficiency which complements profit efficiency in that it makes it possible to retrieve the scale efficiency of a unit as a component of its profitability efficiency. In addition, the measure of profitability efficiency allows for a dual profitability interpretation of the GDF measure of technical efficiency. The concepts introduced in the paper are illustrated using a numerical example.

Profitability of a sample of Portuguese bank branches and its decomposition into technical and allocative components

The efficiency literature, both using parametric and non-parametric methods, has been focusing mainly on cost efficiency analysis rather than on profit efficiency. In for-profit organisations, however, the measurement of profit efficiency and its decomposition into technical and allocative efficiency is particularly relevant. In this paper a newly developed method is used to measure profit efficiency and to identify the sources of any shortfall in profitability (technical and/or allocative inefficiency). The method is applied to a set of Portuguese bank branches first assuming long run and then a short run profit maximisation objective. In the long run most of the scope for profit improvement of bank branches is by becoming more allocatively efficient. In the short run most of profit gain can be realised through higher technical efficiency. © 2003 Elsevier B.V. All rights reserved.

Efficiency in Islamic and conventional banking:an international comparison

The paper investigates the efficiency of a sample of Islamic and conventional banks in 10 countries that operate Islamic banking for the period 1996–2002, using an output distance function approach. We obtain measures of efficiency after allowing for environmental influences such as country macroeconomic conditions, accessibility of banking services and bank type. While these factors are assumed to directly influence the shape of the technology, we assume that country dummies and bank size directly influence technical inefficiency. The parameter estimates highlight that during the sample period, Islamic banking appears to be associated with higher input usage. Furthermore, by allowing for bank size and international differences in the underlying inefficiency distributions, we are also able to demonstrate statistically significant differences in inefficiency related to these factors even after controlling for specific environmental characteristics and Islamic banking. Thus, for example, our results suggest that Sudan and Yemen have relatively higher inefficiency while Bahrain and Bangladesh have lower estimated inefficiency. Except for Sudan, where banks exhibits relatively strong returns to scale, most sample banks exhibit very slight returns to scale, although Islamic banks are found to have moderately higher returns to scale than conventional banks. While this suggests that Islamic banks may benefit from increased scale, we would emphasize that our results suggest that identifying and overcoming the factors that cause Islamic banks to have relatively low potential outputs for given input usage levels will be the key challenge for Islamic banking in the coming decades.

Emulation of dynamic computer models with multivariate output

This preliminary report describes work carried out as part of work package 1.2 of the MUCM research project. The report is split in two parts: the ?rst part (Sections 1 and 2) summarises the state of the art in emulation of computer models, while the second presents some initial work on the emulation of dynamic models. In the ?rst part, we describe the basics of emulation, introduce the notation and put together the key results for the emulation of models with single and multiple outputs, with or without the use of mean function. In the second part, we present preliminary results on the chaotic Lorenz 63 model. We look at emulation of a single time step, and repeated application of the emulator for sequential predic- tion. After some design considerations, the emulator is compared with the exact simulator on a number of runs to assess its performance. Several general issues related to emulating dynamic models are raised and discussed. Current work on the larger Lorenz 96 model (40 variables) is presented in the context of dimension reduction, with results to be provided in a follow-up report. The notation used in this report are summarised in appendix.

The environmental impacts of technical change

The thesis is concerned with relationships between profit, technology and environmental change. Existing work has concentrated on only a few questions, treated at either micro or macro levels of analysis. And there has been something of an impasse since the neoclassical and neomarxist approaches are either in direct conflict (macro level), or hardly interact (micro level). The aim of the thesis was to bypass this impasse by starting to develop a meso level of analysis that focusses on issues largely ignored in the traditional approaches - on questions about distribution. The first questions looked at were descriptive - what were the patterns of distribution over time of the variability in types and rates of environmental change, and in particular, was there any evidence of periodization? Two case studies were used to examine these issues. The first looked at environmental change in the iron and steel industry since 1700, and the second studied pollution in five industries in the basic processing sector. It was established that environmental change has been markedly periodized, with an apparently fairly regular `cycle length' of about fifty years. The second questions considered were explanatory - whether and how this periodization could be accounted for by reference to variations in aspects of profitability and technical change. In the iron and steel industry, it was found that diffusion rates and the rate of nature of innovation were periodized on the same pattern as was environmental change. And the same sort of variation was also present in the realm of profits, as evidenced by cyclical changes in output growth. Simple theoretical accounts could be given for all the empirically demonstrable links, and it was suggested that the most useful models at this meso level of analysis are provided by structural change models of economic development.

Technical innovation in industrial production

New techniques in manufacturing, popularly referred to as mechanization and automation, have been a preoccupation of social and economic theorists since the industrial revolution. A selection of relevant literature is reviewed, including the neoclassical economic treatment of technical change. This incorporates alterations to the mathematical production function and an associated increase in the efficiency with which the factors of production are converted into output. Other work emphasises the role of research and development and the process of diffusion, whereby new production techniques are propagated throughout industry. Some sociological writings attach importance to the type of production technology and its effect on the organisational structure and social relations within the factory. Nine detailed case studies are undertaken of examples of industrial innovation in the rubber, automobile, vehicle components, confectionery and clothing industries. The old and new techniques are compared for a range of variables, including capital equipment, labour employed, raw materials used, space requirements and energy consumption, which in most cases exhibit significant change with the innovation. The rate of output, labour productivity, product quality, maintenance requirements and other aspects are also examined. The process by which the change in production method was achieved is documented, including the development of new equipment and the strategy of its introduction into the factory, where appropriate. The firm, its environment, and the attitude of different sectors of the workforce are all seen to play a part in determining the motives for and consequences which flow from the innovations. The traditional association of technical progress with its labour-saving aspect, though an accurate enough description of the cases investigated, is clearly seen to afford an inadequate perspective for the proper understanding of this complex phenomenon, which also induces change in a wide range of other social, economic and technical variables.

Plant oils as fuels for compression ignition engines: a technical review and life-cycle analysis

As an alternative fuel for compression ignition engines, plant oils are in principle renewable and carbon-neutral. However, their use raises technical, economic and environmental issues. A comprehensive and up-to-date technical review of using both edible and non-edible plant oils (either pure or as blends with fossil diesel) in CI engines, based on comparisons with standard diesel fuel, has been carried out. The properties of several plant oils, and the results of engine tests using them, are reviewed based on the literature. Findings regarding engine performance, exhaust emissions and engine durability are collated. The causes of technical problems arising from the use of various oils are discussed, as are the modifications to oil and engine employed to alleviate these problems. The review shows that a number of plant oils can be used satisfactorily in CI engines, without transesterification, by preheating the oil and/or modifying the engine parameters and the maintenance schedule. As regards life-cycle energy and greenhouse gas emission analyses, these reveal considerable advantages of raw plant oils over fossil diesel and biodiesel. Typical results show that the life-cycle output-to-input energy ratio of raw plant oil is around 6 times higher than fossil diesel. Depending on either primary energy or fossil energy requirements, the life-cycle energy ratio of raw plant oil is in the range of 2–6 times higher than corresponding biodiesel. Moreover, raw plant oil has the highest potential of reducing life-cycle GHG emissions as compared to biodiesel and fossil diesel.

The efficiency and productivity of Malaysian banks:an output distance function approach

This study employs stochastic frontier analysis to analyze Malaysian commercial banks during 1996-2002, and particularly focuses on determining the impact of Islamic banking on performance. We derive both net and gross efficiency estimates, thereby demonstrating that differences in operating characteristics explain much of the difference in outputs between Malaysian banks. We also decompose productivity change into efficiency, technical, and scale change using a generalised Malmquist productivity index. On average, Malaysian banks experience mild decreasing return to scale and annual productivity change of 2.37 percent, with the latter driven primarily by technical change, which has declined over time. Our gross efficiency estimates suggest that Islamic banking is associated with higher input requirements. In addition, our productivity estimates indicate that the potential for full-fledged Islamic banks and conventional banks with Islamic banking operations to overcome the output disadvantages associated with Islamic banking are relatively limited. Merged banks are found to have higher input usage and lower productivity change, suggesting that bank mergers have not contributed positively to bank performance. Finally, our results suggest that while the East Asian financial crisis had an interim output-increasing effect in 1998, the crisis prompted a continuing negative impact on the output performance by increasing the volume of non-performing loans.

Efficiency in Islamic and conventional banking:an international comparison

The paper investigates the efficiency of a sample of Islamic and conventional banks in 10 countries that operate Islamic banking for the period 1996 to 2002, using an output distance function approach. We obtain measures of efficiency after allowing for environmental influences such as country macroeconomic conditions, accessibility of banking services and bank type. While these factors are assumed to directly influence the shape of the technology, we assume that country dummies directly influence technical inefficiency. The parameter estimates highlight that during the sample period, Islamic banking appear to be associated with higher input usage. Furthermore, by allowing for international differences in the underlying inefficiency distributions, we are also able to demonstrate statistically significant differences in efficiency across countries even after controlling for specific environmental characteristics and Islamic banking. Thus, for example, our results suggest that Sudan and Yemen have relatively higher inefficiency while Iran and Malaysia have lower estimated inefficiency. Except for Sudan, where banks exhibits relatively strong returns to scale, most sample banks exhibit very slight returns to scale, although Islamic banks are found to have moderately higher returns to scale than conventional banks. However while this suggests that Islamic banks may benefit from increased scale, we would emphasize that our results suggest that identifying and overcoming the factors that cause Islamic banks to have relatively high input requirements will be the key challenge for Islamic banking in the coming decades.

Single polarisation output of erbium-doped fibre ring laser utilising a small tilted fibre grating structure

Single polarisation operation of a fibre ring laser was realised by employing an intra-cavity 9.3°-tilted fibre Bragg grating as an in-fibre polariser. The laser showed a polarisationextinction-ratio of ~ 31dB with a good stability. © 2010 Optical Society of America.