Article ID: | iaor19992236 |
Country: | Netherlands |
Volume: | 105 |
Issue: | 3 |
Start Page Number: | 427 |
End Page Number: | 446 |
Publication Date: | Mar 1998 |
Journal: | European Journal of Operational Research |
Authors: | Ferrier Gary D., Borger Bruno De, Kerstens Kristiaan |
Keywords: | financial |
This paper evaluates as variety of technical efficiency measures based on a given nonparametric reference technology, the free disposal hull. Specifically, we consider the radial measure of Debreu/Farrell and the nonradial measures of Färe, Färe and Lovell and Zieschang. Furthermore, input-based, output-based, and graph efficiency versions of these four measures are computed. Theoretical consideration as to the best choice among these alternative measures is inconclusive; therefore, we examine this problem from an empirical viewpoint. Calculating thirteen different measures of technical efficiency for a sample of US banks, we compare the measures' efficiency distributions and rankings, paying particular attention to how well the radial measure approximates its nonradial alternatives.