European Investment Firm Industries and the Efficiency Differentiation. A Microeconomic Model in an Institutional Perspective

Abstract

The efficiency of European investment firms' industries addresses the differentiation issue, which is investigated connecting an institutional perspective to microeconomic productivity literature. The effort is to combine macro- and micro-perspectives in the empirical analysis of a cross-country financial industry. Referring to the UK and Italy, an unbalanced data set (comprising over 1,100 observations between 1995 and 1998) measures cost inefficiency by four different specifications of the stochastic frontier model using a translog cost function. The empirical findings emphasize the significance of our attempt of including environmental variables.

JEL Classification: D5, G9