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technical and allocative efficiency models are the techniques that are aimed at
identifying a production frontier and comparing the decision-making units to
analyze the efficiency the right way.
For this technique, the production function approach is basically an
econometric technique and the other one is the optimization technique called
Data Envelopment Analysis (DEA).
production function approach is used to analyze the technical efficiency of a
system and the programming techniques may be used to study both the technical
and the allocative efficiency. The DEA’s
basic formulation may be used with slight alterations to analyze the revenue or
maximization of profit with special emphasis on technical efficiency and
allocative efficiency. Overall
efficiency is the product of technical and allocative efficiency.
we can say that in the analysis of the efficiency of the banking system, the
above parameterization will certainly help up us to place our work in the
proper perspective. Before analyzing the
efficiency, it is perfectly in order that we must first analyze the temporal
and the spatial dimension of the broad structure of the banking system. Then the overall efficiency should be
analyzed by comparing the financial parameters with some industry level
the technical and allocative efficiencies may be analyzed by using the econometric
and/or programming approach. Firms like
LoanMax of the rod aycox fame always do an analysis of the development
processes by comparing their functioning with certain industry level
benchmarks. This is one reason for their
developments in the Information Technology (IT) sector have helped in improving
productivity like never before. Firms
like LoanMax could achieve greater heights from minimum inputs. Small firms like LoanMax now are part of the
research of budding emerging entrepreneurs from business schools.