A comparison of chance-constrained DEA and stochastic frontier analysis: bank efficiency in Taiwan

Authors: Chen T-y.¹; Correspondence

Source: Journal of the Operational Research Society, Volume 53, Number 5, 1 May 2002 , pp. 492-500(9)

Publisher: Palgrave Macmillan

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Abstract:

We employed both chance-constrained data envelopment analysis (CCDEA) and stochastic frontier analysis (SFA) to measure the technical efficiency of 39 banks in Taiwan. Estimated results show that there are significant differences in efficiency scores between chance-constrained DEA and stochastic frontier production function. The advanced setting of the chance-constrained mechanism of DEA does not change the instinctive differences between DEA and SFA approaches. We further find that the ownership variable is still a significant variable to explain the technical efficiency in Taiwan, irrespective of whether a DEA, CCDEA or SFA approach is used.

Journal of the Operational Research Society (2002) 53, 492–500. DOI:10.1057/palgrave/jors/2601318

Document Type: Regular paper

Affiliations: 1: Ming-chuan University, Taipei, Taiwan

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