The purpose of this paper is to examine the possibility of measuring efficiency in the context of higher education. The paper begins by exploring the advantages and drawbacks of the various methods for measuring efficiency in the higher education context. The ease with which data envelopment analysis (DEA) can handle multiple inputs and multiple outputs makes it an attractive choice of technique for measuring the efficiency of higher education institutions (HEIs), yet its drawbacks cannot be ignored. Thus a number of extensions to the methodology, designed to overcome some of the disadvantages, are presented. The paper ends with an application of DEA to a data set of more than 100 HEIs in England using data for the year 2000/01.Technical and scale efficiency in the English higher education sector appear to be high on average. The Pastor et al (2002) test for comparing nested DEA models is useful in reducing the full model to a smaller 'significant' set of inputs and outputs.Thus the quantity and quality of undergraduates, the quantity of postgraduates, expenditure on administration, and the value of interest payments and depreciation are significant inputs to, and the quantity and quality of undergraduate degrees, the quantity of postgraduate degrees and research are significant outputs in the English higher education production process. The possibility of differences in the production frontier (and hence the distribution of efficiencies) of three distinct groups of HEIs is explored using a test proposed by Charnes et al (1981), but no significant differences are found. Bootstrapping procedures, however, suggest that differences between the most and least efficient English HEIs are significant. JEL Classification: I21, C14
We compare, using data envelopment analysis (DEA) and meta-frontier analysis (MFA), the performance of Islamic and conventional banks during the period [2004][2005][2006][2007][2008][2009]. The use of nonparametric MFA is new to the Islamic banking context. Our DEA finds no significant difference in mean efficiency between conventional and Islamic banks when efficiency is measured relative to a common frontier. The MFA however, reveals some fundamental differences between the two bank types. In particular, the modus operandi in Islamic banking appears to be less efficient on average than the conventional one. Managers of Islamic banks, however, make up for this as mean efficiency in Islamic banks is higher than in conventional banks when efficiency is measured relative to their own bank type frontier. A second-stage analysis shows that differences between the two banking systems remain even after banking environment and bank-level characteristics have been taken into account. These findings are relevant to both policy-makers and regulators. In particular, Islamic banks should explore the benefits of moving to a more standardized system of banking, while the underperformance of conventional bank managers could be examined in the context of the on-going remuneration culture.
This study uses data envelopment analysis (DEA) to examine the relative efficiency of over 100 selected Chinese regular universities. Various models are developed to measure the research efficiency of these higher education institutions (HEIs) using data for 2003 and 2004. The findings show that the level of efficiency depends on whether or not a subjective measure of research output (based on experts' opinions of the HEIs) is included as an output in the model. Mean efficiency is higher when the reputation variable is included (around 90%) than when it is not (mean efficiency is around 55% in this case). However, the rankings of the universities are remarkably insensitive to whether or not this variable is included. Bootstrapping procedures are used to find the 95% confidence intervals for the efficiencies, and indicate that the best and worst performing institutions are significantly different from each other; only the middle-performing 30% of HEIs cannot be distinguished from each other in terms of their performance. Further investigation suggests that regional location, source of funding and whether the university is comprehensive or specialist may all contribute to the observed differences in performance. The regional differences are consistent but not significant at conventional levels of significance; the efficiencies differ significantly by administrative type when the subjective measure of research output is excluded from the analysis; comprehensive universities consistently and significantly outperform specialist institutions. The possibility of regional differences in performance is particularly worrying since the already economically disadvantaged Western region may suffer a continued lag in development if its HEIs are less efficient than those in the better developed Central and coastal regions. JEL classification:I21, I23, C14
As student numbers in the UK's higher education sector have expanded substantially during the last 15 years, it has become increasingly important for government to understand the structure of costs in higher education, thus allowing it to evaluate the potential for expansion and associated cost implications. This study applies Data Envelopment Analysis (DEA) to higher education institutions (HEIs) in England in the period 2000/01-2002/03 to assess the cost structure and the performance of various HEI groups. The paper continues and complements an earlier study by Johnes, Johnes and Thanassoulis (2008), who used parametric regression methods to analyse the same panel data. Interestingly, the DEA analysis provides estimates of subject-specific unit costs that are in the same ballpark as those provided by the parametric methods. We then extend the previous analysis by examining potential cost savings and output augmentations in different HEI groups using several different DEA models. The findings include a suggestion that substantial gains of the order of 20-27% are feasible if all potential savings are directed at raising student numbers so that each HEI exploits to the full not only operating and scale efficiency gains but also adjusts its student mix to maximise student numbers. Finally we use a Malmquist index approach to assess productivity change in UK HEIs. The results reveal that for a majority of HEIs productivity has actually decreased during the study period.
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