What is the net effect of financial liberalization on bank productivity? A decomposition analysis of bank total factor productivity growth

Sailesh Tanna, Yun Luo and Glauco De Vita

Journal of Financial Stability, 2017, vol. 30, issue C, 67-78

Abstract: We employ a unique framework to quantify the net effect of financial liberalization on banks’ total factor productivity (TFP) growth through a decomposition analysis of two effects: a positive direct effect of financial liberalization on bank TFP growth; and a negative indirect effect operating through a higher propensity to systemic banking crisis. The empirical decomposition is based on a sample of 1530 banks operating in 88 countries over the period 1999–2011. We find that the net effect of financial liberalization on bank TFP growth is positive: the direct positive effect outweighs the negative one. An important policy implication flows from these findings.

Keywords: Financial liberalization; Banking crisis; Systemic risk; Bank productivity; Total factor productivity (search for similar items in EconPapers)
JEL-codes: D24 E44 G01 G21 G28 G32 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1572308917302644
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:30:y:2017:i:c:p:67-78

DOI: 10.1016/j.jfs.2017.04.003

Access Statistics for this article

Journal of Financial Stability is currently edited by I. Hasan, W. C. Hunter and G. G. Kaufman

More articles in Journal of Financial Stability from Elsevier
Bibliographic data for series maintained by Catherine Liu ().