Estimation of Technical and Allocative Inefficiency Using Fourier Flexible Cost Frontiers for Taiwan's Banking Industry

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Title:	Estimation of Technical and Allocative Inefficiency Using Fourier Flexible Cost Frontiers for Taiwan's Banking Industry
Authors:	黃台心;Huang, Tai-hsin;王美惠;Wang, Mei-hui
Contributors:	淡江大學財務金融學系
Date:	2003-05-15
Issue Date:	2009-11-30 17:52:26 (UTC+8)
Publisher:	Blackwell
Abstract:	We construct a Fourier flexible functional form which can globally approximate the unknown true function, taking into account both technical inefficiency and allocative inefficiency components to avoid possible specification error. Empirical results suggest that technical inefficiency alone raises a bank's cost about 12 per cent on average, that allocative inefficiency alone raises an average bank's cost 15.8 per cent, and that the cost rises due to allocative inefficiency decrease over time. Translog evidence on economic efficiency suggests a much higher cost savings when achieving both technical and allocative efficiency than does the Fourier flexible function.
Relation:	Manchester School 71(3), p.341-362
DOI:	10.1111/1467-9957.00350
Appears in Collections:	[Graduate Institute & Department of Banking and Finance] Journal Article [Graduate Institute & Department of Industrial Economics] Journal Article

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