The efficiency associated with it is clearly different from the allocation efficiency, because initially we were not sure what the source of this particular efficiency was, and Leibenstein called it X-efficiency
Analysis of Commercial Banks in Pakistan: A Preliminary Investigation.
Gunster, Carree and Dijk (2011) study the impact of cartels on economic efficiency conceptualized as allocative efficiency (profitability), productive or x-efficiency
(labor productivity) and dynamic efficiency (innovation).
This paper reviews some of the issues surrounding X-(in)efficiency including some raised by Oliver Williamson, as well as reviewing the empirical literature on X-efficiency
in the financial sectors of the U.S.
Studies of bank efficiency have used the terms technical efficiency and X-efficiency
interchangeably as if they were the same thing.
As a result of banking deregulation, banks like most other firms in the economy, set then own interest rates and vigorously compete with one another for depositors and loan customers .These recent changes in terms of X-Efficiency
of Indian Commercial Banks in globalize era during 2005-10 have been analyzed at length taking up the Non-Parametric Approach in the paper titled "X-Efficiency
Analysis of Indian Commercial Banks in the Globalized Era-A Non parametric Approach."
SFA and DFA have been used for some studies to measure the X-efficiency
of commercial bank or other financial institutions such as studies that were conducted by Semih and Philippatos (2001), Hassan (2003 and 2006).
Consolidation can improve the X-efficiency
of an industry if it entails X-inefficient firms leaving the market, either via withdrawals or via mergers and acquisitions.
In measuring the dependent variable, we use several performance measures that are used extensively in the literature, such as return on assets (ROA), return on equity (ROE) (Claessens et al., 2000; Demirguc-Kunt and Huizinga, 1999) and profit X-efficiency
(PEFF) (DeYoung and Nolle, 1996; Hasan and Marton, 2003).
Jason Potts, however, tells us that Leibenstein's X-efficiency
concept is 'logically meaningless in a strictly neoclassical framework' (p.
In addition, economists also speak of X-efficiency
, which is the maximum effective use of inputs due to internal motivational and external environmental and market pressures.