How Market Competition and Stability in the Banking Sector Affect Total Factor Productivity Changes: Evidence from a Panel of European Union Banks

Cândida Ferreira ()

Journal of Banking and Financial Dynamics, 2025, vol. 9, issue 8, 12-23

Abstract: This paper contributes to the literature by first employing a Data Envelopment Analysis (DEA) approach to measure bank efficiency. The results, presented through Malmquist indices, analyse changes in technical, technological, and scale efficiency across a panel of 784 relevant banks from all 27 European Union (EU) countries between 2006 and 2021. In the second stage, the study utilises panel dynamic Generalized Method of Moments (GMM) estimations to assess the impact of bank market competition (measured using the estimated Boone indicator) and bank stability (represented by the estimated Z-score) on total productivity changes. This analysis controls for various relevant bank activities, economic growth, and the influence of significant crises that affected the EU banking sector during the study period. The principal findings suggest that while bank market competition appears to foster enhancements in total factor productivity, variables such as bank loans, bank deposits and short-term funding, bank market stability, and economic growth do not demonstrate a clear contribution to changes in total factor productivity for the considered banks.

Keywords: Bank total factor productivity changes; Boone indicator; European union banking sector; Malmquist indices; Z-score. (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ecsenet.com/index.php/2576-6821/article/view/627/240 (application/pdf)

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:ajn:jobafd:v:9:y:2025:i:8:p:12-23:id:627

Access Statistics for this article

More articles in Journal of Banking and Financial Dynamics from Eastern Centre of Science and Education
Bibliographic data for series maintained by Tracy William ( this e-mail address is bad, please contact ).