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.

An improved conflicting evidence combination approach based on a new supporting probability distance

To avoid counter-intuitive result of classical Dempster's combination rule when dealing with highly conflict information, many improved combination methods have been developed through modifying the basic probability assignments (BPAs) of bodies of evidence (BOEs) by using a certain measure of the degree of conflict or uncertain information, such as Jousselme's distance, the pignistic probability distance and the ambiguity measure. However, if BOEs contain some non-singleton elements and the differences among their BPAs are larger than 0.5, the current conflict measure methods have limitations in describing the interrelationship among the conflict BOEs and may even lead to wrong combination results. In order to solve this problem, a new distance function, which is called supporting probability distance, is proposed to characterize the differences among BOEs. With the new distance, the information of how much a focal element is supported by the other focal elements in BOEs can be given. Also, a new combination rule based on the supporting probability distance is proposed for the combination of the conflicting evidences. The credibility and the discounting factor of each BOE are generated by the supporting probability distance and the weighted BOEs are combined directly using Dempster's rules. Analytical results of numerical examples show that the new distance has a better capability of describing the interrelationships among BOEs, especially for the highly conflicting BOEs containing non-singleton elements and the proposed new combination method has better applicability and effectiveness compared with the existing methods.

Dynamic Distance-Based Shape Features for Gait Recognition

We propose a novel skeleton-based approach to gait recognition using our Skeleton Variance Image. The core of our approach consists of employing the screened Poisson equation to construct a family of smooth distance functions associated with a given shape. The screened Poisson distance function approximation nicely absorbs and is relatively stable to shape boundary perturbations which allows us to define a rough shape skeleton. We demonstrate how our Skeleton Variance Image is a powerful gait cycle descriptor leading to a significant improvement over the existing state of the art gait recognition rate.

Impacts of vessel capacity reduction programs on the efficiency in fisheries. The case of Australia's multispecies in northern prawn fishery

Capacity reduction programs in the form of buybacks or decommissioning programs have had relatively widespread application in fisheries in the US, Europe and Australia. A common criticism of such programs is that they remove the least efficient vessels first, resulting in an increase in average efficiency of the remaining fleet. The effective fishing power of the fleet, therefore, does not decrease in proportion to the number of vessels removed. Further, reduced crowding may increase efficiency of the remaining vessels. In this paper, the effects of a buyback program on average technical efficiency in Australia’s Northern Prawn Fishery are examined using a multi-output distance function approach with an explicit inefficiency model. The results indicate that average efficiency of the remaining vessels was greater than that of the removed vessels, and that average efficiency of remaining vessels also increased as a result of reduced crowding.

Pre-crash and non-crash traffic flow trends analysis on motorways

Crashes that occur on motorways contribute to a significant proportion (40-50%) of non-recurrent motorway congestions. Hence, reducing the frequency of crashes assists in addressing congestion issues (Meyer, 2008). Crash likelihood estimation studies commonly focus on traffic conditions in a short time window around the time of a crash while longer-term pre-crash traffic flow trends are neglected. In this paper we will show, through data mining techniques that a relationship between pre-crash traffic flow patterns and crash occurrence on motorways exists. We will compare them with normal traffic trends and show this knowledge has the potential to improve the accuracy of existing models and opens the path for new development approaches. The data for the analysis was extracted from records collected between 2007 and 2009 on the Shibuya and Shinjuku lines of the Tokyo Metropolitan Expressway in Japan. The dataset includes a total of 824 rear-end and sideswipe crashes that have been matched with crashes corresponding to traffic flow data using an incident detection algorithm. Traffic trends (traffic speed time series) revealed that crashes can be clustered with regards to the dominant traffic patterns prior to the crash. Using the K-Means clustering method with Euclidean distance function allowed the crashes to be clustered. Then, normal situation data was extracted based on the time distribution of crashes and were clustered to compare with the “high risk” clusters. Five major trends have been found in the clustering results for both high risk and normal conditions. The study discovered traffic regimes had differences in the speed trends. Based on these findings, crash likelihood estimation models can be fine-tuned based on the monitored traffic conditions with a sliding window of 30 minutes to increase accuracy of the results and minimize false alarms.

Impacts of vessel capacity reduction programmes on efficiency in fisheries : the case of Australia’s multispecies northern prawn fishery

Capacity reduction programmes, in the form of buybacks or decommissioning, have had relatively widespread application in fisheries in the US, Europe and Australia. A common criticism of such programmes is that they remove the least efficient vessels first, resulting in an increase in average efficiency of the remaining fleet, which tends to increase the effective fishing power of the remaining fleet. In this paper, the effects of a buyback programme on average technical efficiency in Australia’s Northern Prawn Fishery are examined using a multi-output production function approach with an explicit inefficiency model. As expected, the results indicate that average efficiency of the remaining vessels was generally greater than that of the removed vessels. Further, there was some evidence of an increase in average scale efficiency in the fleet as the remaining vessels were closer, on average, to the optimal scale. Key factors affecting technical efficiency included company structure and the number of vessels fishing. In regard to fleet size, our model suggests positive externalities associated with more boats fishing at any point in time (due to information sharing and reduced search costs), but also negative externalities due to crowding, with the latter effect dominating the former. Hence, the buyback resulted in a net increase in the individual efficiency of the remaining vessels due to reduced crowding, as well as raising average efficiency through removal of less efficient vessels.

The technical efficiency of the Japanese banks : non-radial directional performance measurement with undesirable output

The paper analyses technical efficiency of the Japanese banks from 2000 to 2007. The estimation technique is based on the Russell directional distance function that takes into consideration not only desirable outputs but also an undesirable output that is represented by non-performing loans (NPLs). The results indicate that NPLs remain a significant burden as for banks' performance. We show that banks' inputs have to be utilised more efficiently, particularly labour and premises. We also argue that a further restructuring process is needed in the segment of Regional Banks. We conclude that the Japanese banking system is still far away from being fully consolidated and restructured.

Modal choice between air and rail : a social efficiency benchmarking analysis that considers CO2 emissions

The problem of modal choice between rail and air arises as public awareness of carbon dioxide (CO2) emissions by the transportation sector rises. In this paper, we answer this question quantitatively by performing an efficiency benchmarking analysis that takes into account life-cycle CO2 emission due to transport service provision. The paper employs nonparametric efficiency estimation methods, namely a slacks-based inefficiency measure, as well as a more conventional directional distance function approach. We apply them to a panel data set for three major railway companies and the aviation sector in Japan for the period from 1999 to 2007. Results shows that, contrary to the common argument, air transport can still be more socially efficient than rail transport, even when the environmental load due to CO2 emission is incorporated. This is due to the aviation sector's extremely low user cost, measured in terms of in-vehicle time. In other words, aviation is a necessary transportation mode for those with a very high willingness to pay for their time.

Changes in environmentally sensitive productivity and technological modernization in China's iron and steel industry in the 1990s

Technological modernization is widely believed to contribute positively both to economic development and to environmental and resource conservation, through improvements in productivity and strengthening of business competitiveness. However, this may not always be true, particularly in the short term, as it requires substantial investments and may impose financial burdens on firms undertaking such investments. This study empirically examines the effects of technological modernization in China's iron and steel industry in the 1990s on conventional economic productivity (CEP) and environmentally sensitive productivities (ESPs). We employ a directional distance function that can handle multiple inputs and outputs to compute relative production efficiencies. We apply these models to the data covering 27 iron and steel firms in China between 1990 and 1999-a period when the Chinese iron and steel industry modernized rapidly. We find that ESPs have continuously improved, even in the period when the CEP declined.

Sulfur dioxide allowances : trading and technological progress

The US Clean Air Act Amendments introduce an emissions trading system to regulate SO2 emissions. This study finds that changes in SO2 emissions prices are related to innovations induced by these amendments. We find that electricity-generating plants are able to increase electricity output and reduce emissions of SO2 and NOx from 1995 to 2007 due to the introduction of the allowance trading system. However, compared to the approximate 8% per year of exogenous technological progress, the induced effect is relatively small, and the contribution of the induced effect to overall technological progress is about 1-2%.

Energy price-induced and exogenous technological change : Assessing the economic and environmental outcomes

In this paper, we distinguish between factor/output substitution and shifts in the production technology frontier. Our model includes the by-products of carbon dioxide and sulfur dioxide emissions where the function requires the simultaneous expansion of good outputs and reductions in emissions. We estimate a directional output distance function for 80 countries over the period 1971-2000 to measure the exogenous and oil price-induced technological change. On average, we find substantial oil price-induced technological progress at the world level when long-term oil prices are rising, although the growth rate is more volatile in developed countries than in developing countries. The results also show that developed countries experience higher exogenous technological progress in comparison with developing countries, and the gap between the two has increased during the period of our study.

Trade-induced technological change : analyzing economic and environmental outcomes

We analyze how changes in trade openness are related to induced technological innovations that are not only GDP increasing but also pollution saving. Our model includes by-products of carbon dioxide and sulfur dioxide emissions. We estimate a directional distance function for 76 countries over the period 1963-2000 to measure exogenous and trade-induced technological change. On average, we find substantial trade-induced technological progress, and its magnitude is about one third of the overall technological change. The trade-induced technological changes, however, are GDP reducing and pollution increasing. Empirically, we find that increased trade openness correlates to increased pollution.

Potential climate effect on Japanese rice productivity

Adaptation to climate change has become an important policy question in recent years. Agriculture is an economic activity that is most sensitive to climate change. We evaluate the dynamic effects of productivity change and individual efforts to adapt to climate change. Adaptation actions in agriculture are evaluated to determine how the climate affects production efficiency. In this paper, we use the bi-directional distance function method to measure Japanese rice production loss due to climate. We find that (1) accumulated precipitation has the greatest effect on rice production efficiency and (2) the climate effect on rice production efficiency decreases over time. Our results empirically support the benefit of the adaptation approach.

Measuring tax efficiency: A tax optimality index

This paper introduces an index of tax optimality that measures the distance of some current tax structure from the optimal tax structure in the presence of public goods. This index is defined on the [0, 1] interval and measures the proportion of the optimal tax rates that will achieve the same welfare outcome as some arbitrarily given initial tax structure. We call this number the Tax Optimality Index. We also show how the basic methodology can be altered to derive a revenue equivalent uniform tax, which measures the tax burden implied by the public sector. A numerical example is used to illustrate the method developed, and extensions of the analysis to handle models with multiple households and nonlinear taxation structures are undertaken.

Aircraft trajectory clustering techniques using circular statistics

This paper presents a statistical aircraft trajectory clustering approach aimed at discriminating between typical manned and expected unmanned traffic patterns. First, a resampled version of each trajectory is modelled using a mixture of Von Mises distributions (circular statistics). Second, the remodelled trajectories are globally aligned using tools from bioinformatics. Third, the alignment scores are used to cluster the trajectories using an iterative k-medoids approach and an appropriate distance function. The approach is then evaluated using synthetically generated unmanned aircraft flights combined with real air traffic position reports taken over a sector of Northern Queensland, Australia. Results suggest that the technique is useful in distinguishing between expected unmanned and manned aircraft traffic behaviour, as well as identifying some common conventional air traffic patterns.