Efficiency

A term that has also been used more and more frequently in the financial world in recent years, but which is nevertheless imprecise. – In detail, a precise distinction must be made between – productivity: factor input to output, – profitability: costs to output, and – profitability, profit rate in the terminology of the older national economy: profit to capital employed. Even in the annual reports of reputable banks, it is often unclear exactly what “efficiency” is supposed to mean; the same applies to “concept” as a term for everything that cannot or does not want to be described exactly. – From the point of view of the market, and from the point of view of economics, in some publications also a linguistic expression for the fact that money, as a claim on scarce resources, is directed to where it generates the highest return: that it reaches the best host (to the most effective allocation of scarce resources); linguistically also unattractively called “optimal allocation of resources”. – Sometimes said for an institution’s performance, material and personnel capacity. – See asset productivity, basic profit, dividend yield, return on equity, revenue efficiency, profit, cost, KLEMS database, eco-efficiency, return, profitability, riskignorance.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
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