The impact of bank market competition and stability on bank total factor productivity changes: evidence from a panel of European Union banks

Candida Ferreira

No 2024/0315, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: This paper contributes to the literature using first a Data Envelopment Analysis (DEA) approach to measure bank efficiency and the results provided by the Malmquist indices to analyse the evolution of the technical, technological, and scale efficiency changes, in a panel including 784 relevant banks of all the 27 European Union (EU) countries, between 2006 and 2021. In the second stage, the study uses panel dynamic Generalised Method of Moments (GMM) estimations to analyse the impact on the total productivity changes of bank market competition (measured with the estimated Boone indicator) and bank stability (proxied with the estimated Z-score), while controlling for some relevant bank activities, economic growth and the influence of the relevant crises that affected the EU banking sector during the considered period. The main findings reveal that while bank market competition looks like promoting the banks’ total factor productivity change, bank loans, bank deposits and short-term funding, as well as bank market stability and economic growth do not contribute to the banks’ total factor productivity changes.

Keywords: European Union banking sector; Malmquist indices; bank total factor productivity changes; Z-score; Boone indicator. (search for similar items in EconPapers)
JEL-codes: C33 D53 F36 G21 (search for similar items in EconPapers)
Date: 2024-03
New Economics Papers: this item is included in nep-ban, nep-com, nep-eec and nep-eff
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Persistent link: https://EconPapers.repec.org/RePEc:ise:remwps:wp03152024

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