EconPapers    
Economics at your fingertips  
 

Recovering Risky Technologies Using The Almost Ideal Demand System: An Application To U.S. Banking

Joseph Hughes, Loretta Mester, William Lang and Choon-Geol Moon ()
Additional contact information
Choon-Geol Moon: Hanyang University

Departmental Working Papers from Rutgers University, Department of Economics

Abstract: We argue for a shift in the focus of modeling production from the traditional assumptions of profit maximization and cost minimization to a more general assumption of managerial utility maximization that can incorporate risk incentives into the analysis of production and recover value-maximizing technologies. We show how this shift can be implemented using the Almost Ideal Demand System. In addition, we suggest a more general way of measuring efficiency that can incorporate a concern for the market value of firms' assets and equity and identify value-maximizing firms. This shift in focus bridges the gap between the risk-incentives literature in banking that ignores the microeconomics of production and the production literature that ignores the relationship between production decisions and risk.

Keywords: agency problems; banking; efficiency; production; risk (search for similar items in EconPapers)
JEL-codes: D20 D21 G21 (search for similar items in EconPapers)
Date: 2000-06-21
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (57)

Downloads: (external link)
http://www.sas.rutgers.edu/virtual/snde/wp/2000-05.pdf (application/pdf)

Related works:
Journal Article: Recovering Risky Technologies Using the Almost Ideal Demand System: An Application to U.S. Banking (2000) Downloads
Working Paper: Recovering risky technologies using the almost ideal demand system: an application to U.S. banking (2000) Downloads
Working Paper: Recovering Risky Technologies Using the Almost Ideal Demand System: An Application to U.S. Banking (2000) Downloads
Working Paper: Recovering risky technologies using the almost ideal demand system: an application to U.S. banking (1997) Downloads
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:rut:rutres:200005

Access Statistics for this paper

More papers in Departmental Working Papers from Rutgers University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2025-04-01
Handle: RePEc:rut:rutres:200005