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Radial and Nonradial Technical Efficiency Measures on a DEA Reference Technology: A Comparison Using US Banking Data

Published online by Cambridge University Press:  17 August 2016

Gary D. Ferrier ,
Kristiaan Kerstens  and
Philippe Vanden Eeckaut
Gary D. Ferrier
Affiliation:
University of Arkansas
Kristiaan Kerstens
Affiliation:
Katholieke Universiteit Brussel
Philippe Vanden Eeckaut
Affiliation:
Université Catholique de Louvain
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Summary

Technical efficiency measure can be classified as either radial or nonradial. While the theorical question of which is the better type of measure is unresolved, the radial measures enjoy much greater popularity than the nonradial measures in the empirical literature. To assess the impact of choice of measure, this paper offers an empirical comparison of one radial and three nonradial measures of technical efficiency, relative to a variable returns to scale DEA model with strong disposability. The distributions and ranking of these efficiency scores are examined for a sample of US banks.

Résumé

Résumé

Les mesures d’efficacité technique se répartissent en mesures radiales ou non radiales. La problématique de la supériorité d’une de ces mesures est toujours ouverte ; cependant la mesure radiale est, actuellement, la plus fréquemment utilisée dans la littérature empirique. Afin d’illustrer l’impact du choix de la mesure, ce papier propose une comparaison empirique où la mesure radiale est confrontée à trois mesures non radiales d’efficacité technique. Ces mesures sont appliquées à un modèle de type DEA à rendements d’échelle variables avec l’hypothèse de forte disposition. La distribution et le classement respectif de ces scores d’efficacité sont ainsi analysés pour un échantillon de banques américaines.

Keywords

D24D69J21D24D69J21
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 60 , Issue 4 , December 1994 , pp. 449 - 479
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1994 

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