Technical progress, inefficiency and productivity change in U.S. banking, 1984-1993

David Wheelock and Paul Wilson

No 1994-021, Working Papers from Federal Reserve Bank of St. Louis

Abstract: Numerous studies have found that US commercial banks are quite inefficient, and we find that, on average, banks became more technically inefficient between 1984 and 1993. Our analysis of productivity change, however, shows that technological improvements adopted by a few banks pushed out the efficient frontier, and that, on average, commercial banks experienced productivity gains. For banks with assets less than 0 million, however, technological improvement was insufficient to offset increased inefficiency, and thus productivity declined over the period. Our findings suggest that increasing inefficiency is reflective of an industry undergoing rapid technical change and adjustment of average firm size, but not necessarily a long-term decline.

Keywords: Banks and banking; Productivity; Technology (search for similar items in EconPapers)
Date: 1996
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Citations: View citations in EconPapers (5)

Published in Journal of Money, Credit, and Banking, May 1999, 31(2), pp. 212-34

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Journal Article: Technical Progress, Inefficiency, and Productivity Change in U.S. Banking, 1984-1993 (1999)
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DOI: 10.20955/wp.1994.021

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