EconPapers    
Economics at your fingertips  
 

A comparative approach of stochastic frontier analysis and data envelopment analysis estimators: evidence from banking system

Kekoura Sakouvogui

Journal of Economic Studies, 2020, vol. 47, issue 7, 1787-1810

Abstract: Purpose - The consistency of stochastic frontier analysis (SFA) and data envelopment analysis (DEA) cost efficiency measures using a sample of 650 commercial and domestic banks in the United States is investigated based on cluster analysis while accounting for the yearly variation in banks. Design/methodology/approach - Due to the importance of efficiency measures for policy and managerial decision-making, the cost efficiency measures of SFA and DEA estimators are examined according to four criteria: levels, rankings, stability over time and stability over clustering groups. In this paper, we present two clustering methods, Gap Statistic and Dindex, that involve SFA and DEA cost efficiency measures. The clustering approach creates homogeneous groups of banks offering a similar mix of efficiency levels. Hence, each evaluated bank knows the cluster to which it belongs. Furthermore, this paper provides nonparametric statistical tests of SFA and DEA cost efficiency measures estimated with and without a clustering approach. Findings - The results suggest that the clustering approach plays a considerable role in the rankings of US banks. Furthermore, the average SFA and DEA cost efficiency measures over time of the homogeneous US banks are substantially higher than those of the heterogeneous US banks. Originality/value - This research is the first to provide comparative efficiency measures needed for desirable policy conclusions of heterogeneous and homogeneous US banks.

Keywords: Cost efficiency measures of banks; DEA; SFA; Cluster analysis (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.emeraldinsight.com/10.1108/JES-01-2019- ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:jespps:jes-01-2019-0051

Ordering information: This journal article can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://www.emerald.com/jes.htm

Access Statistics for this article

Journal of Economic Studies is currently edited by Professor Mohsen Bahmani-Oskooee

More articles in Journal of Economic Studies from Emerald Group Publishing
Bibliographic data for series maintained by Virginia Chapman ().

 
Page updated 2022-01-25
Handle: RePEc:eme:jespps:jes-01-2019-0051