Evaluation of technical efficiency by STATA Academic Essay

Evaluation of technical efficiency by STATA

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I am a PhD student in the finance and banking area. I would like to measure the technical efficiency in the Turkish banks from 2002 to 2015. Technical efficiency is going to be measured with considering both good and bad input/outputs. Specifically, the focus is to investigate the impact of non-performing loans (NPL) on the banks efficiency. To meet the goal of study, I want to follow the model of Cuesta et al. (2009) which is called “Translog Enhanced Hyperbolic Distance Function”. Unfortunately, I can not paste the whole formula here for you while you can find the word format of the same description along with the relevant articles.
I want to run the above formula in the Stata IC 14 (64-bit) for windows on my data sheet, which is provided on excel sheet and can be found as an attachment, in order to estimate the technical efficiency since it has not been defined by default in Stata. This model is stochastic frontier (parametric) model suitable to run for multiple input-output institutions considering both desirable and undesirable input/outputs. To make it more clear for you. The first part of the formula is measuring the technical efficiency, the second part of the formula, from at onward, is measuring the shadow prices of the parameters and finally “vit” and “uit” are about the efficiency errors and random errors representatively.
The below variables have been defined as desirable and undesirable inputs/outputs for this study:
Inputs:
1) Price of Capital (calculated as Total operating expenses/ Total fixed asset)
2) Price of Deposit (calculated as Interest expenses on deposit/ Total deposit)
Desirable outputs:
1) Total loans and receivable
2) Non-interest income
3) Off-balance sheet activities
4) Net securities
Undesirable output:
1) Non-performing loans(NPLs)
To complete the process of coding, initially, the coefficients in the above formula need to be estimated by using “Maximum Likelihood Estimation” and then by using the data sheet the initial dependent variable which – ln (y2i), that is representing the technical efficiency, is going to be calculated.
Please find the extra documents and article those used this model previously as the attachments of this order.
Do not hesitate to contact me if you need any further information or documents.
Thank you in advance for your cooperation and help.

 

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