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.