Malmquist Indexes Using a Geometric Distance Function (GDF). Application to a Sample of Portuguese Bank Branches
- 205 Downloads
Traditional approaches to calculate total factor productivity (TFP) change through Malmquist indexes rely on distance functions. In this paper we show that the use of distance functions as a means to calculate TFP change may introduce some bias in the analysis, and therefore we propose a procedure that calculates TFP change through observed values only. Our total TFP change is then decomposed into efficiency change, technological change, and a residual effect. This decomposition makes use of a non-oriented measure in order to avoid problems associated with the traditional use of radial oriented measures, especially when variable returns to scale technologies are to be compared. The proposed approach is applied in this paper to a sample of Portuguese bank branches.
KeywordsEfficiency Malmquist Indexes Bank Branches
Unable to display preview. Download preview PDF.
- Färe, R, Grosskopf, S, Norris, M 1997Productivity growth, technical progress and efficiency changes in industrialized countries: reply’Am Econ Rev8710401043Google Scholar
- Färe, R, Grosskopf, S, Norris, M, Zhang, Z. 1994Productivity growth, technical progress and efficiency changes in industrialised countriesAm Econ Rev846683Google Scholar
- Färe R, Grosskopf S, Roos P (1998) Malmquist productivity indexes: a survey of theory and practice. In: Färe R, Grosskopf S, Russell RR (eds) Index numbers: essays in honour of Sten Malmquist. Kluwer Academic Publishers, pp. 127–190.Google Scholar
- Lovell CAK (2001) The decomposition of Malmquist productivity indexes. Paper presented at the 7th European Workshop on Efficiency and Productivity Analysis, Oviedo, Spain, 25–29 September.Google Scholar
- Portela MCS, Thanassoulis E (2002), Profit efficiency in DEA. Aston Business School Research Paper RP0206, ISBN 185449502X, University of Aston, Aston Triangle, Birmingham B4 7ET, UK.Google Scholar
- Py, B 1990Statistique Descriptive, 3e ÉditionEconomicaParisGoogle Scholar
- Ray SC (2001) On an extended decomposition of the Malmquist productivity index. Paper presented at the 7th European Workshop on Efficiency and Productivity Analysis, Oviedo, Spain, September 25–29.Google Scholar
- Ray, SC, Desli, E 1997Productivity growth, technical progress and efficiency changes in industrialized countries: commentAm Econ Rev8710331039Google Scholar