Comparison of Economic Efficiency Estimation Methods: Parametric and Non-parametric Techniques.

Manchester School (Impact Factor: 0.26). 09/2002; 70(5):682-709. DOI: 10.1111/1467-9957.00320
Source: RePEc


This paper employs a wide range of parametric and non-parametric cost frontiers' efficiency estimation methods to estimate economic efficiency and economies of scale, using the same panel data of 22 Taiwanese commercial banks over the period 1982-1997. According to our empirical implementation, the two methodologies yield similar average efficiency estimates, yet they come to very dissimilar results pertaining to the efficiency rankings, the stability of measured efficiency over time, the consistency between frontier efficiency and conventional performance measures, and the estimates of scale economies. Thus, the choice of an estimation approach can result in very different conclusions and policy implications regarding cost efficiencies and cost economies. These findings are not meaningless to the extent that they are advisable in making policy decisions and evaluations that rely on multiple techniques and specifications. Copyright 2002 by Blackwell Publishers Ltd and The Victoria University of Manchester

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    • "Vol 4, No.10, 2012 60 effects of the decommissioning program ( Lindebo et al., 2007). Due to the key role of efficiency and its determinant factors in fishing management and a decommissioning program, there is a growing interest in the measurement of technical efficiency and the factors determining it at fishing fleet level (Esmaeili, 2006; Garcia del Hoyo et al., 2004; Hjalmarsson et al., 1996; Huang & Wang, 2002; Idda et al., 2009; Kirkley & Squires, 1999; Kirkley et al., 2002; Lindebo et al., 2007; Maravelias & Tsitsika, 2008; Pascoe et al., 2001; Reid et al., 2003; Reinhard et al., 2000; Squires et al., 2003; Tingley et al., 2005; Vestergaard et al., 2003). "
    01/2012; 4(10).
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    • "found very high rank-order correlations between DEA and SFA, whereas Ferrier and Lovell (1990) found rank-order correlation of only 0.02 (not significantly different from zero). Also, in the most recent study, Huang and Wang (2002), using a panel of Taiwanese commercial banks, report that parametric and non-parametric methods are generally contradictory in ranking the sample banks based on their estimated efficiency scores. In contrast, Eisenbeis et al. (1997) found that while the calculated programming inefficiency scores derived from the DEA approach are two to three times larger than those estimated using a 5 For a detailed discussion of the pros and cons of each methodology see Coelli et al. (2005). "
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    ABSTRACT: The objective of this article is 2-fold. First, it provides an empirical assessment of the cost and profit stochastic frontiers based on a panel dataset of Greek commercial banks over the period 1993 to 2005. Second, on the basis of the same sample, it also compares the most widely used parametric and nonparametric techniques to cost efficiency measurement, namely, the Stochastic Frontier Approach and Data Envelopment Analysis. The results suggest greater similarities between the predictions of cost and profit efficiency methods than between parametric and nonparametric techniques. Such evidence is new in the literature and calls for a more technically level playing field for estimating bank efficiency.
    Applied Financial Economics 02/2009; 19(3):191-202. DOI:10.1080/09603100801935370
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    • "Apart from measuring efficiency, applications using DEA have been recommended by FAO (1998) from the late- 1990s onwards to measure also fishing capacity (Kirkley and Squires, 1999; Pascoe et al., 2001b; Kirkley et al., 2002; Reid et al., 2003; Vestergaard et al., 2003). Although several studies compare results obtained with parametric and non-parametric techniques as well as with some of their variants (Van den Broek et al., 1980; Hjalmarsson et al., 1996; Reinhard et al., 2000; Huang and Wang, 2002), comparative studies for fisheries are so far lacking. Our objective is to compare results obtained using DFA and different SFA variants for the purse-seine fleet operating in ICES Journal of Marine Science, 61: 416e421. "
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    ABSTRACT: We give a broad review of a variety of econometric procedures to estimate technical efficiency and compare the results of several of them based on an application to the purse-seine fishery operating in the Gulf of Cádiz in 1998 and 1999. As these approaches provide different technical efficiency estimates, they might have different policy implications. Two conclusions are obtained: firstly, the higher the useful life of vessels is, the smaller the technical efficiency is; and secondly, the present total allowable catch regime based only on vessels larger than 12 m is unsuitable for this fishery.
    ICES Journal of Marine Science 05/2004; 61(3):416-421. DOI:10.1016/j.icesjms.2004.02.003 · 2.38 Impact Factor
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