Productivity Gains of Financial Industry: Empirical Evidence from Malaysia

Rossazana Ab-Rahim

The IUP Journal of Bank Management, 2012, vol. XI, issue 3, 36-52

Abstract: The increased competitive forces due to the structural reforms in the banking environment stimulate the incumbents operating inside the production frontier. Banks invest more in innovation and technological tools; as a result, the production frontier shifts outwards. By employing Data Envelopment Analysis (DEA) (window analysis), this study investigates the trend of productivity in Malaysian commercial banking sector over the period 1995 to 2005. The productivity change is decomposed into technological change and technical efficiency change. During the study period, the growth in productivity was mainly contributed by the technological improvement rather than technical efficiency change. It is worth noting that the domestic commercial banks have exhibited technological progress as the source of productivity.

Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjbm:v:11:y:2012:i:3:p:36-52

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