Empirical Analysis of Production Economics: Applications to Banking

Stephen Miller

Chapter 29 in Handbook of Production Economics, 2022, pp 1165-1191 from Springer

Abstract: Abstract Volume II of the Handbook of Production Economics provides surveys of empirical applications of the neoclassical production economics discussed in Volume I. This chapter examines empirical applications in banking that now enter what we can categorize as accumulated, accepted knowledge or wisdom. To begin, we consider how to measure output. Two basic approaches exist – the production and intermediation specifications. The treatment of deposits differentiates these two specifications, whereby the production approach takes deposits as an output and the intermediation approach takes deposits as an input. Then, this chapter proceeds to discuss various issues in bank production – bank productivity growth, bank and banking industry profitability, economies of scale and scope in banking, and bank efficiency. Bank efficiency includes efficiency as measured by the production function, the cost function, the revenue function, the profit function, and the efficient frontier between expected return and risk. The chapter concludes with an analysis of predicting problem banks and/or bank failures.

Keywords: Banking-Productivity-Profitability-Scale; Scope-Efficiency-Expected return; Risk-Failure Prediction (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/978-981-10-3455-8_29

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