FDH Directional Distance Functions: With an Application to European Commercial Banks

Laurens Cherchye, Timo Kuosmanen, Thierry Post

Research output: Contribution to journalArticle

34 Citations (Scopus)

Abstract

We extend Free Disposable Hull (FDH) efficiency analysis towards the general directional distance function framework. The profit interpretation of directional distance functions is extended to the non-convex FDH technologies. In addition, we derive an efficient enumerative algorithm for computing distance measures in Free Disposable Hull (FDH) technologies, which applies to the entire (infinitely large) family of directional distance functions. A simple numerical example and an application to European commercial banks illustrate the algorithm.

Original languageEnglish
Pages (from-to)201-215
Number of pages15
JournalJournal of Productivity Analysis
Volume15
Issue number3
DOIs
Publication statusPublished - Dec 1 2001

Keywords

  • Banks
  • Data Envelopment Analysis (DEA)
  • Directional distance function
  • Enumeration
  • Free Disposable Hull (FDH)

ASJC Scopus subject areas

  • Business and International Management
  • Social Sciences (miscellaneous)
  • Economics and Econometrics

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