Athanasoglou, Panayiotis and Georgiou, Evangelia and Staikouras, Christos (2008): Assessing output and productivity growth in the banking industry. Published in: RePEc No. Working Paper 2 (November 2008)
Download (429kB) | Preview
This paper assesses the evolution of output and productivity in the Greek banking industry for the period 1990-2006. Three main categories of bank output were estimated based on modern theoretical approaches, while for the aggregation and estimation of output and inputs and the estimation of productivity (partial and total factor) we relied on the index number method (Tornqvist index). Additionally, we considered the effect of labor quality on banks’ productivity and using a growth accounting framework we examined the contribution of total factor productivity (TFP) to bank output growth. The results show that bank output and labor productivity increased considerably during the period under examination, outpacing the respective GDP growth and labor productivity of the Greek economy. Capital productivity and TFP of the Greek banking industry have also improved remarkably mainly since 1999, as a result of the structural changes that took place within the industry, capital investments (mainly in IT equipment) as well as improvement in the quality of human capital.
|Item Type:||MPRA Paper|
|Original Title:||Assessing output and productivity growth in the banking industry|
|English Title:||Assessing output and productivity growth in the banking industry|
|Keywords:||Bank output; user-cost approach; total factor productivity; Tornqvist index; growth accounting; labor quality|
|Subjects:||O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital; Skills; Occupational Choice; Labor Productivity
D - Microeconomics > D2 - Production and Organizations > D24 - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages
|Depositing User:||PANAYIOTIS P. ATHANASOGLOU|
|Date Deposited:||04. Jul 2011 11:13|
|Last Modified:||12. Feb 2013 23:01|
Asimakopoulos I. G., S. N. Brissimis and Μ. D. Delis (2008), “Efficiency in the Greek banking system and its determinant factors”, Bank of Greece, Economic Bulletin, 30, 7-34 (in Greek).
Athanasoglou P. P. and S. N. Brissimis (2004), “The effect of mergers and acquisitions on bank efficiency in Greece” Bank of Greece, Economic Bulletin, 22, 7- 34.
Αthanasoglou P. P., S. N. Brissimis and M. D. Delis (2008), “Bank-specific, industry- specific and macroeconomic determinants of bank profitability”, Journal of International Financial Markets, Institutions and Money, 18, 2, 121-136.
Balk, B. M. (2001), “Scale efficiency and productivity change”, Journal of Productivity Analysis,15, 159-183.
Bank of Greece, Monetary Policy, Interim Report, (October 2006 και October 2003)
Βarnett, W. A. (1980), “Economic monetary aggregates: an application of index number and aggregation theory”, Journal of Econometrics, 14, 11-59.
Barro, R. J. (1999), “Notes on growth accounting”, Journal of Economic Growth, 4, 119-137.
Bell F.W. and Murphy N. B. (1968), “Economies of scale and division of labor in commercial banking”, National Banking Review, 5, 131-139.
Benston, G. J. (1965), “Branch banking and economies of scale”, Journal of Finance, vol. 20, 2, 312-331.
Benston, G. J., G. A. Hanweck. and D. B. Humphrey (1982), “Scale economies in banking: a restructuring and reassessment”, Journal of Money, Credit and Banking, 14, 435-450.
Berg, S. A., F. R. Førsund and E. S. Jansen (1992), “Malmquist indices of productivity growth during the deregulation of Norwegian banking, 1980-1989”, Scandinavian Journal of Economics, 94, 211-228.
Berger, A. N. and D. B. Humphrey (1992), “Measurement and efficiency issues in commercial banking”, in Griliches (ed.) Output measurement in the service sectors, University of Chicago Press, Chicago.
Brandolini A. and P. Cipollone (2001), “Multifactor productivity and labour quality in Italy, 1981-2000”, Temi di discussione, Banca d’Italia, no. 422.
Card, D. (1999), “The causal effect of education on earnings”, in Ashenfelter, O. and Card, D: Handbook of Labor Economics, 3, 1801-1863.
Casu, B., Girardone, C. and Molyneux, P. (2004), “Productivity change in banking: A comparison of parametric and non-parametric approaches”, Journal of Banking and Finance, 28, 10, 2521-2540.
Caves, D. W., L. R. Christensen and W. E. Diewert (1982), “The economic theory of index numbers and the measurement of input, output and productivity”, Econometrica, 50, 1393-1414.
Coelli, T., D. S. P. Rao, C. J. O’Donnell and G. Battese (2005), An Introduction to efficiency and productivity analysis, 2nd edition, New York: Springer.
Davis, E. P. and K. Tuori (2000), “The changing structure of banks’ income: An empirical investigation”, Economics and Finance, Working Paper Νo. 11, Brunel University, West London.
Diewert, W. E. (1976), “Exact and superlative index numbers”, Journal of Econometrics, 4, 115-145.
Diewert, E. and D. Lawrence (1999), “Measuring New Zealand’s productivity”, New Zealand Treasury, Working Paper, 99/5.
Donovan, D. J. (1978) “Modelling the demand for liquid assets: an application to Canada”, IMF Staff Papers, 25, 4, 676-704.
Drake L., M. Hall and R. Simper (2006), “The impact of macroeconomic and regulatory factors on bank efficiency: A non-parametric analysis of Hong Kong’s banking system”, Journal of Banking and Finance, 30, 1443-1466.
Εuropean Central Bank (2000), “EU Banks’ Income Structure”, April 2000.
Εuropean Central Bank (2002), “Structural analysis of the EU banking sector”, November 2002.
Εuropean Central Bank (2005), Monthly Bulletin, March 2005.
Εuropean Central Bank (2007 a), Financial integration in Europe, March 2007.
Εuropean Central Bank (2007 b), Payment and securities settlement systems in the European Union, Blue Book, fourth edition.
Färe R., S. Grosskopf , M. Norris and Z. Zhang (1994), “Productivity growth, technical progress and efficiency change in industrialized countries”, The American Economic Review, 84, 1, 66-83.
Favero C. and L. Papi (1995), “Technical and scale efficiency in the Italian banking sector: A non-parametric approach”, Applied Economics, 27, 385-395.
Fixler, D. (1993), “Measuring financial service output and prices in commercial banking”, Applied Economics, 25, 983-999.
Fixler, D. and K. Zieschang (1992), “User costs, shadow prices and the real output of banks” in Griliches (ed.) Output Measurement in the Service Sectors, (Chicago: University of Chicago Press). Freixas, X. and J. C. Rochet (1997), Microeconomics of banking, The MIT Press. Griliches Z. (1987), “Productivity: measurement problems”, in J.Eatwell, M.Milgate and P.Newman (eds.), The New Palgrave: A Dictionary of Economics.
Guarda P. and Rouabah A. (2007), “Banking output and price indicators from quarterly reporting data”, Banque Centrale du Luxembourg, Working Paper, no.27.
Hancock, D. (1985), “The financial firm: production with monetary and nonmonetary goods”, Journal of Political Economy, 93, 4-6, 859-918.
Hill, P. (1993), Price and volume measures, Chapter XVI in System of National Accounts 1993 (Eurostat, IMF, OECD, UN and World Bank), 379-406.
Hulten, C. (2000), “Total Factor Productivity: A short biography”, National Bureau of Economic Research Working Paper, no. 7471.
Ηumphrey, D. (1991), “Productivity in banking and effects from deregulation”, Federal Reserve Bank of Richmond, Economic Review, March-April, 16-28.
International Monetary Fund (2004), Producer price index manual, theory and practice.
Jorgenson D. and Z. Griliches (1967), “The explanation of productivity change”, Review of Economic Studies, 89, 2, May, 109-115.
Κatz, L. and Murphy, K. (1992), “Changes in relative wages, 1963-1987: supply and demand factors”, Quarterly Journal of Economics, 107, 35-78.”
Kim, M. (1986), “Banking technology and the existence of a consistent output aggregate”, Journal of Monetary Economics, 18, 181-195.
Mawson P., K. Carlaw and N. McLellan (2003), “Productivity measurement: alternative approaches and estimates”, New Zealand Treasury Working Paper, 03/12.
Melvin, J. (1995), “History and measurement in the service sector: A review”, Review of Income and Wealth, 41, 4, December, 481-493.
Morttinen, L. (2002), “Banking sector output and labour productivity in six European countries”, Bank of Finland Discussion Papers, no. 12.
Murray J. D. and R. W. White (1983), “Economies of scale and economies of scope in multiproduct financial institutions: a study of British Columbia credit unions”, Journal of Finance, 38, 3, 887-902.
Noulas A.G. (1997), “Productivity growth in the Hellenic banking industry: state versus private banks”, Applied Financial Economics, 7, 223-228.
OECD (2001), Measuring productivity manual, Μeasurement of aggregate and industry-level productivity.
Rezitis A. N. (2006), “Productivity growth in the Greek banking industry: A non- parametric approach”, Journal of Applied Economics, 9, 1, 119-138.
Schwerdt, G. and J. Turunen, (2006), “Growth in euro area labour quality”, CEPR Discussion Paper, Νo. 5509.
Sealy C.W. and J. T. Lindley (1977), “Inputs, outpus and a theory of production and cost at depository financial institutions”, Journal of Finance, 32, 1251-1266.
Solow, R. M. (1957), “Technical change and the aggregate production function”, Review of Economics and Statistics, 39, 312-320.
Star, S. (1974), “Accounting for the growth of output”, American Economic Review, 64, 123-135.
Star, S. and R.E. Hall (1976), “An approximate Divisia index of total factor productivity”, Εconometrica, 44, 257-263.
Stigler G. J. (1947), Trends in output and employment, National Bureau of Economic Research, New York.
Tinbergen J. (1942), “Zur Theorie der langfristigen Wirtschaftsentwicklung”, Weltwirtschaftliches Archiv 55, 1, 511-49; English translation (1959), “On the Theory of Trend Movements” in “Jan Tinbergen, Selected Papers”, L.H.Klaasen, L.M.Koyck and H.J.Witteveen (eds.), North-Holland, Amsterdam, 182-221.
Triplett, J. E. (1991), “Measuring the output of banks: What do banks do?”, Bureau of Economic Analysis, Discussion Paper No. 53, Washington DC, US Department of Commerce.
Triplett, J. E. and B. Bosworth (2000), Productivity in the US services sector, Brookings Institution Press.
Tsionas, E., Lolos S. and Christopoulos D. (2003), “The performance of the Greek banking system in view of the EMU: results from a non-parametric approach”, Journal of Economic Modelling, 20, 571-592.
Wheelock D. C. and P. W. Wilson (1999), “Technical progress, inefficiency and productivity change in US banking, 1984-1993”, Journal of Money, Credit and Banking, 31, 2, 212-233.