Banks’ efficiency and credit risk analysis using by-production approach: the case of Iranian banks

This article uses a by-production approach that integrates credit risk to monitor bank efficiency. The method overcomes the possible misspecification issues of the commonly assumed weak disposability (WDA) of undesirable outputs. In addition, our measure extends the classic by-production approach by including statistical aspects through subsampling techniques. We have also provided an algorithm to correct related infeasibilities. Using this approach, we investigate the performance of Iranian banks and credit risk management in the sector for the period 1998–2012. Non-performing loans (NPLs) have been used as an undesirable output and proxy for credit risk in our models. Based on our empirical results, although the banks generally exhibited efficiency improvements over time, their credit risk performance deteriorated considerably after the regulatory changes introduced in 2005. These findings confirm that credit quality can be monitored more actively across Iranian banks.     

Portfolio management of the free banks of Illinois: An examination of historical allegations

We are grateful to Andrew Economopoulos and to Charles Kahn for comments; to an anonymous referee for several helpful suggestions; and to the Research Board of the University of Illinois for providing support.     

Economic Liberalization and Productivity Growth: Further Evidence From Bangladesh

The impact of economic liberalization reforms on the productive performances of manufacturing firms remains a contentious issue in the literature. This paper attempts to contribute to the debate by empirically estimating productivity growth of Bangladesh food manufacturing using firm level data before and after reform. Empirical results show that the share of output growth was accounted for by input growth in most sectors of this industry. In some sectors, the estimated rate of total factor productivity (TFP) growth is negligible or even negative. Decomposition of the TFP growth shows that technological progress plays a significant role in TFP growth across firms within the sub-sectors of this industry. Empirical results also show that the relative contribution of capacity realization to TFP growth is not substantial in inhibiting the industry's high and sustained growth. These dismal performances indicate that the industries responded a little to the implementation of economic reforms.     

Stakeholder Salience in Public and Private Firms: Results from Tanzania

It has become evident that Western concepts of business and management must be evaluated within their realms of application. The objective of this research was to analyze the effects of stakeholder attributes of power, legitimacy, and urgency on the stakeholder salience of shareholders, employees, customers, and community in state-owned and privatized firms in Tanzania. In general, the framework developed and used in Western studies proved useful in characterizing Tanzanian management perceptions toward stakeholders. That is, when using a common questionnaire, results were obtained that linked stakeholder saliency with underlying attributes. Nevertheless, the saliency profile for stakeholders was different in the Tanzanian culture from previous studies in the United States and Spain. In a Tanzanian context, employees, customers, and community attained inferior status compared to the results obtained in developed countries for which the theory had been developed. Profiles were also different in comparing state-owned and privatized firms in Tanzania. Results indicated that the effects on salience are similar for shareholders but different for the remaining stakeholder groups in the two categories of firms. Some policy recommendations are made as a consequence of observations, and the need for further work is acknowledged.     

Can medium-scale farms support smallholder commercialisation and improve welfare? Evidence from Nigeria

In spite of mounting evidence about the growth of medium-scale farms (MSFs) across Africa, there is limited empirical evidence on their impact on neighbouring small-scale farms (SSFs). We examine the relationships between MSFs and SSFs, with particular focus on the specific mechanisms driving potential spillover effects. First, we develop a theoretical model explaining two propagating mechanisms: learning effects (training) and cost effects (reduced transactions cost). An empirical application to data from Nigeria shows that SSFs with training from MSFs tend to use higher levels of modern inputs (have higher productivity), and receive higher prices and income. The results also show that purchasing inputs from MSFs reduces the costs of accessing modern inputs and is associated with higher inorganic fertiliser use by SSFs. Our results suggest that the benefits of receiving training and purchasing inputs from MSFs are particularly important for very small-scale producers, operating less than 1 hectare of land. This implies that policies which promote the efficient operation of MSFs and encourage their interaction with SSFs can be an effective mechanism for improving the productivity and welfare of smallholder farms, hence reducing their vulnerability to extreme poverty.