• Asia-Pacific Journal of Business
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• v.6 no.2
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• pp.1-17
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• 2015

This study compares the most widely used parametric and non-parametric techniques to measure cost and profit efficiency of banks, namely the Stochastic Frontier Analysis (SFA) and Data Envelopment Analysis (DEA). We formulate the specification form of both stochastic cost and profit frontier models and constant return to scale Cost DEA and Profit DEA models and provide an empirical assessment of the cost and profit frontiers based on a panel dataset of National Commercial Banks (NCBs) and Private Banks (PBs) in Bangladesh over the 2001-2010 period. The cost inefficiency and profit efficiency are slightly higher for PBs than NCBs in case of both SFA and DEA. The coefficients of advance and off-balance sheet items are significant that positively influence the banks in stochastic cost frontier model while the advance, other earning assets, price of borrowed fund are significant and negative effects on the banks in stochastic profit frontier model. The average cost inefficiency and average profit efficiency are recorded with 16.3% and 91% respectively. The highest and lowest cost inefficiency are observed for Janata Bank and United Commercial Bank Limited whilst the highest and lowest profit efficiency are recorded for Eastern Bank Limited and Janata Bank respectively. The average technical and allocative efficiency are 68.8% and 35.9%, respectively in case of CRS cost-DEA model whereas they are 70.3% and 31.8% in case of CRS profit-DEA model. The average cost inefficiency is recorded 6.3% by SFA whereas it is 24.5% by DEA. The average profit efficiency is found 91% by SFA while it is 22.1% by DEA, and SFA method shows better bank efficiency than DEA.

• Journal of Korea Trade
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• v.26 no.3
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• pp.23-44
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• 2022

Purpose - Recent issues such as vessel enlargement, strengthening of environmental regulations, and port smartization are expected to increase costs and intensify competition in the port industry. In the new normal era, when external growth has reached its limit, the efficient operation of ports is becoming indispensable for achieving sustainable growth. This study aims to identify the determinants of inefficiency by examining the cost structure and efficiency of container terminals in Korea and furthermore propose the political implications to derive the maximization of efficiency. Design/methodology - This study estimates the cost function of container terminal operators and identifies the efficiency of container terminals using stochastic cost frontier (SCF) in the first stage. In the second step, the SCF results are compared with the data envelopment analysis (DEA). Last, this paper proposes efficiency determinants on container terminal operation to establish appropriate strategies. Out of the 29 container terminal operators in South Korea, 13 operators participated in the survey. The translog cost function was estimated utilizing a total of 116 observations collected over the 2007-2017 period. Findings - Empirical analysis shows that economies of scale exist in Korea's container ports, which provides a rationale for the government's policy to establish the global terminal operator by integrating small terminal operators to enhance competitiveness. In addition, as a result of the determinants analysis, container throughput, weight of direct employment costs, and labour cost share have positive effects on improving cost efficiency, while inefficiency increases as the length of quay increases. More specifically, cost efficiency improves as the proportion of direct employment costs to outsourcing service costs increases. Originality/value - This study contributes to analyzing the inefficiency factors of container terminals through efficiency analysis with respect to a cost function. In addition, this study proposes the practical and political implications, such as establishing a long-term manpower pool, the application of the hybrid liner terminal system, and the construction of a statistical data system, to improve the cost inefficiency of terminal operators.

• Korean Journal of Agricultural Science
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• v.37 no.3
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• pp.509-514
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• 2010

The purpose of this study is to analyze the technical efficiency and its determinants for Korean Apiculture farming by using from door to door and e-mail inquiry data. The analysis was implemented through the Cobb-Douglas stochastic frontier production function (SFPF) model including the technical inefficiency effect model for cross-sectional data. To measure the SFPF model, honey production was used for a dependent variable, and for input variables labor cost, preventive cost, material cost, feeding cost, depreciation cost were used. Farmer's age, farmer's career, farming scale, full-time or half-time firm and movement or fixed firm variables were used to measure the inefficiency effect model. The average technical efficiency on apiculture farming in Korea is estimated to be 0.8112. It means that there were technical inefficiency of about 18.88% in Korea apiculture farming. In this study there are some suggestions which could increase the technical efficiency of Korean apiculture farming.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.1
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• pp.751-758
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• 2021

This research is conducted to measure the efficiency level of Islamic banking in Indonesia and also to analyze the factors that can affect its efficiency level. This research used a purposive sampling technique to determine the sample size that will be used, with criteria that the bank has been operating since 2010 and consistently published its financial reports during the research period from 2011 until 2019; therefore, the total sample obtained was 11 samples. Analysis for efficiency level is done by using linear programming Stochastic Frontier Analysis (SFA), with test tool in the form of Frontier 4.1 and Eviews9 to find out what factors that affect efficiency. Efficiency test is done by involving input and output, while influence test used bank-specific variables comprising bank size, bank financial ratio, and macro-economy variable. Research result shows that there are only two banks that are almost close to being fully efficient firms, but the result still does not indicate that Islamic bank works efficiently. Results of the influence test show that factors affecting Islamic banking efficiency in Indonesia are bank size, Capital Adequacy Ratio (CAR), Non-Performing Finance (NPF), and Financing to Deposit Ratio (FDR), while other factors are not influential over the study period.

• Asia-Pacific Journal of Business
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• v.7 no.1
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• pp.31-42
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• 2016

Small and Medium Enterprises (SMEs) are suitable to provide employment with lower investment in densely populated countries like Bangladesh. A stochastic frontier model is used to evaluate performance of SME Banking of the commercial banks in Bangladesh. Input (Total Deposit, Cost of Fund and Salary Expenditure) and output (Finance to SME) data are collected on 45 banks which are dealt with SME for 13 quarters from $1^{st}$quarter of 2010 to $2^{nd}$quarter of 2013. Average performance of the SME banking is 0.716 in Bangladesh. That is, banks have opportunity to increase 30% performance in SME banking from the same inputs. Bangladesh Development Bank has lowest performance (0.540) while Eastern bank has the highest performance (0.753). Highest (0.743) and lowest (0.662) performance is observed during the second quarter of 2013 and fourth quarter of 2010 respectively. Inefficient Bank might be benefited by following the rules of efficient banks.

• KSCE Journal of Civil and Environmental Engineering Research
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• v.34 no.5
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• pp.1559-1569
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• 2014

The purpose of this study is to estimate the degree of cost inefficiency for the urban railway lines of a metropolitan city operated by public institutions in Korea and identify the causes of this inefficiency. To this end, we assume that the urban railway lines produce the output of train-km by putting three production factors of labor, electric power and maintenance and set the variable cost function model with the translog function to make a stochastic cost frontier analysis. Based on estimated result, we conclude that the cost savings for 6 years of all lines are about 6,672 hundred million won and top five lines with high inefficiency are Busan Line1, Daegu Line1, Daejeon Line1, Gwangju Line1, and Daegu Line2. The causes of inefficiency are attributable to labor and maintenance factors. The results of this study can be useful in case of finding the priorities of measures and specific plans for reducing labor and maintenance costs in the urban railway operation.

• Asia-Pacific Journal of Business
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• v.10 no.2
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• pp.1-12
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• 2019

Collaborative research and development (R&D) has been encouraged based on the belief that knowledge spill-over is mutually beneficial for partners. Although the benefits are supported by science and technology policy research, the risk of R&D collaboration has not been extensively discussed. Two independent studies suggest that there are risks associated with the overuse of collaborative research frameworks. Two sets of R&D collaboration data were analyzed: between the national bio-technology research program and 1) Data Envelop Analysis (DEA), and 2) between Stochastic Frontier Analysis (SFA). In the case of SFA, output measures were integrated into a single output, with weights extracted from research programme managers' responses to the questionnaire. While the DEA result demonstrated the inefficiency of collaborative research, SFA did not. Unlike previous research highlighting risks associated with disclosing proprietary R&D and potential conflict of interest, our study indicates that the transaction's social cost affects collaborative research efficiency. Therefore, governments promoting R&D collaborations should be carefully managed, and policy makers must reconsider the strict conditions governing compulsory collaborative R&D programs.

• Journal of Korean Society of Transportation
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• v.25 no.6
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• pp.141-157
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• 2007

This paper evaluates the effects of privatization and deregulation on the firm-specific efficiency and total factor productivity (TFP) growth in the Korean and Japanese railways. Using a stochastic frontier approach and a generalized translog functional form, the paper specifies the equation system consisting of a multiproduct variable cost function and input share equations which is estimated with Zellner's iterative seemingly unrelated regression and the corrected least squares method. The Korean and Japanese railway firms are assumed to produce three outputs (Shinkansen passenger-kilometers, incumbent railway passenger-kilometers, ton-kilometers of freight) using three input factors (labor, fuel, maintenance and rolling stock). A monetary value of the ways and fixed installations held by the railroad firm is also included as a quasi-fixed input. The empirical results indicate that the average estimate of cost inefficiency is 2.57% for the total sample and on the average, JNR and JR Kyushu are found to be worst efficient while the most efficient railway firm in the sample is JR West. Also the cost efficiency levels of seven JRs have been improved after the reform and privatization of JNR. The findings also indicate that TFP growth of the privately-owned JRs are higher than those of the government-owned KNR and JNR. Three-island JRs and JR Freight have slightly higher TFP growth than Honshu JRs as well. Thus, the results suggest that managerial autonomy and increased competition via deregulation have improved efficiency and TFP growth.

• Korean Journal of Agricultural Science
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• v.44 no.3
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• pp.424-439
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• 2017

This study was undertaken to examine the profit efficiency and its determining factors, the investment opportunity, and the challenges of shea butter producers in the northern region of Ghana. The methods employed in this research were the Stochastic Profit Frontier (SPF) model, gain-cost and investment return analyses, as well as Kendall's W statistic using primary data collected from 120 purposively-selected respondents. Results from the analysis indicated that profit efficiency was positively influenced by sex, household size, marital status, educational level, transportation cost, store rent, and price of shea nut with a gain in profit efficiency of 58.5%. The investment analysis demonstrated a net gain per person of $8,077 equivalent to GH₵ 28,270 Ghanaian cedi (GH₵) using 2016 exchange rate (GH₵ 3.5 = $1). Among the challenges identified, the poor quality of shea nuts was the most prioritised challenge with 72.8% agreement among the respondents. Based on these findings, it was recommended that proper training and education, as well as improvement in shea nut quality, should be promoted to improve the profit efficiency of shea butter producers.

• The Korean Journal of Financial Management
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• v.22 no.2
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• pp.71-89
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• 2005

The purpose of this research is to examine X-efficiency of Korean local credit unions in 2001 by employing the stochastic frontier approach. This study uses the intermediation approach in order to define outputs and inputs of the credit unions. We define the outputs as the amounts of loans, and securities. The inputs are labor, deposit and physical capital. The price of labor is estimated by dividing the total wages by the number of employees. The price of deposit equals total interest divided by total deposit, and the price of physical capital is also computed to divide the total sales and administrative expenses by the physical capital. By the result of this study, the average efficiency score is 0.81. This fact indicates that credit unions can reduce their inputs by 19% for the given outputs. If results are arranged into quartiles based on the efficiency, inefficiency of top 25% credit unions is below 9%, and half of them is over 17%. In addition, e result shows that the efficiency is significantly influenced by region and size even if credit unions in Seoul and Daegu showed little difference in efficiency by size. Generally, medium size credit unions are more efficient than large size.