Assessing productivity in the presence of negative data and undesirable outputs

Few studies address the presence of negative data and undesirable outputs in productivity assessment. This study proposes a range-adjusted measure model that uses a non-radial Malmquist productivity index to estimate dynamic productivity in the presence of negative data and undesirable outputs. Banking-industry data are used to demonstrate the proposed model. The results show that during the 2007-2009 global financial crises, bank productivity deteriorated, mainly because of technical changes, and smaller banks suffered smaller financial losses. Finally, a decision making matrix based on the analysis results is presented to show the implications of the proposed method.