Hyperbolic Efficiency and Parametric Distance Functions: With Application to Spanish Savings Banks

By Rafael A. Cuesta, José Luis Zofío. 2005

109 citations recorded by the source corpus.

Distance functions are gaining relevance as alternative representations of production technologies, with growing numbers of empirical applications being made in the productivity and efficiency field. Distance functions were initially defined on the input or output production possibility sets by Shephard (1953, 1970) and extended to a graph representation of the technology by Färe, Grosskopf and Lovell (1985) through their graph hyperbolic distance function. Since then, different techniques such as non parametric-DEA and parametric-SFA have been used to calculate these distance functions. However, in the latter case we know of no study in which the restriction to input or output orientation has been relaxed. What we propose is to overcome such restrictiveness on dimensionality by defining and estimating a parametric hyperbolic distance function which simultaneously allows for the maximum equiproportionate expansion of outputs and reduction of inputs. In particular, we introduce a translog hyperbolic specification that complies with the conventional properties that the hyperbolic distance function satisfies. Finally, to illustrate its applicability in efficiency analysis we implement it using a data set of Spanish savings banks.

Subfields: Economics and Econometrics, Management Science and Operations Research

View Paper: https://www.semanticscholar.org/paper/a91d89efdfc2aeb640bff385d0cc47c0654cbcd0

Citations in the corpus

• Competition and efficiency: overseas students and technical efficiency in Australian and New Zealand universities (2009, unknown): “Thus, like other authors, such as Paul et al. (2000) and Cuesta and Zofio (2005), we assume that Coelli’s results apply to our econometric approach and that we need not be concerned with the endogeneity issue.25”