Sources of Productivity Changes of Commercial Banks in Developing Economy: Evidence from Malaysia, 1998-2003

Fadzlan Sufian

International Journal of Applied Econometrics and Quantitative Studies, 2005, vol. 2, issue 3, 87-100

Abstract: Applying a non-parametric Malmquist Productivity Index (MPI) method, this paper attempts to investigate the productivity changes of Malaysian banks during the post crisis period of 1998-2003. Our results suggest that: (1) Malaysian banking sector have exhibit productivity regress of 6.3% and that the productivity regressed during the period of study was largely attributed to Technological (6.1%) rather than Technical Efficiency (0.2%) regress. (2) Malaysian banks regardless of size have exhibit productivity regress ranging from 1.5% to as high as 10.0% and (3) The smallest bank in our sample is too small to reap the benefits of economies of scale, while the largest bank in our sample, is too large to be scale efficient.

Keywords: Finance and Banking; Productivity Change; Malmquist Productivity Index (search for similar items in EconPapers)
JEL-codes: D24 G21 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (1)

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