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A note: Bootstrap standard errors and confidence intervals for weak axiom of cost minimization (WACM) based bank managerial efficiency estimates

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  • Dwight Steward

Abstract

Although the nonparametric nature of Varian (Microeconomic Theory, Norton, New York, 1984) Weak Axiom of Cost Minimization (WACM) methodology offers a number of advantages in the estimation of bank managerial efficiency, this approach possesses a potentially critical problem: measurement error and other stochastic influences are not explicitly accounted for in the calculation of managerial efficiency estimates. The failure to account for these factors could significantly effect the validity of WACM based efficiency estimates. The principal objective of this paper is to provide bootstrap based test statistics for the WACM managerial efficiency estimates that explicitly account for these stochastic factors. The managerial efficiency measurement methodology utilized in this paper also provides new estimates of banking industry managerial efficiency.

Suggested Citation

  • Dwight Steward, 1998. "A note: Bootstrap standard errors and confidence intervals for weak axiom of cost minimization (WACM) based bank managerial efficiency estimates," Applied Economics Letters, Taylor & Francis Journals, vol. 5(10), pages 617-621.
    • Handle: RePEc:taf:apeclt:v:5:y:1998:i:10:p:617-621
    DOI: 10.1080/135048598354285
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    References listed on IDEAS

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    1. Loretta J. Mester, "undated". "Efficiency of Banks in the Third Federal Reserve District," Rodney L. White Center for Financial Research Working Papers 02-94, Wharton School Rodney L. White Center for Financial Research.
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    Cited by:

    1. W D A Bryant, 2009. "General Equilibrium:Theory and Evidence," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 6875, August.
    2. Paul Oslington, 2012. "General Equilibrium: Theory and Evidence," The Economic Record, The Economic Society of Australia, vol. 88(282), pages 446-448, September.

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