On the study of confidence intervals of Taiwan's banking sector efficiency

Abstract

This article applies a distribution-free approach to estimate the economic efficiencies of Taiwan's multioutput banking industry, under the framework of the cost frontier. The joint confidence interval estimates for economic efficiencies are constructed using multiple comparisons with the best (MCB) procedure. A salient characteristic of MCB procedure is that it is able to identify multiple efficient firms lying on the minimum cost frontier. The MCB intervals reveal at the 95 and 75% confidence levels that four out of 22 banks in the sample may be statistically efficient.