Malmquist indexes using a geometric distance function (GDF): application to a sample of Portuguese bank branches

Maria C.A. Silva Portela, Emmanuel Thanassoulis

Research output: Contribution to journalArticle

Abstract

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.
Original languageEnglish
Pages (from-to)25-41
Number of pages17
JournalJournal of Productivity Analysis
Volume25
Issue number1-2
DOIs
Publication statusPublished - Apr 2006

Keywords

  • efficiency
  • Malmquist indexes
  • bank branches

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