Non-Parametric Tests for Firm Efficiency in Case of Errors-in-Variables

This paper develops a novel statistic for firm efficiency called efficiency depth thatallows for statistical inference in case of errors-in-variables. We derive statistical teststhat require minimal statistical assumptions; neither the sample distribution nor thenoise level is required. An empirical illustration for European banks illustrates that -despite the minimal assumptions- the tests can have substantial discriminating powerin practical applications.errors-in-variables;firm efficiency;nonparametric analysis