Productivity Change in the CEE Commercial Banks during a Period of Restricted Bank Regulation and Stable Economic Growth

Igor Stubelj, Aleš Trunk, Barbara Švagan and Suzana Laporšek
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Igor Stubelj: Faculty of Management, University of Primorska, 6000 Koper, Slovenia
Aleš Trunk: International School for Social and Business Studies, 3000 Celje, Slovenia
Barbara Švagan: Faculty of Management, University of Primorska, 6000 Koper, Slovenia

Economies, 2023, vol. 11, issue 10, 1-17

Abstract: The paper studies the productivity change of the commercial banks in the CEE countries over the post-crisis period 2013–2018. The productivity change is measured by the Malmquist Productivity Index and its sub-components, applying two approaches—the asset-oriented and profit-oriented intermediation approaches. The analysis uses data from a balanced panel of 181 commercial banks in 11 CEE countries. We find that commercial banks’ productivity, measured with the asset-oriented intermediation approach, decreased in most of the CEE countries over 2013–2018, with a decline ranging, on average, from 1% to 6.9%, driven mainly by a decline in technical efficiency. Nevertheless, estimates using the profit-intermediation approach point to productivity growth in commercial banks in all CEE countries, ranging, on average, from 0.5% to 6.3%. The empirical findings imply the need for the CEE commercial banks to further digital transformation and cost rationalization.

Keywords: commercial banks; productivity; productivity change; Malmquist index; Central and Eastern Europe (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:gam:jecomi:v:11:y:2023:i:10:p:260-:d:1263925

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