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Productivity in the Financial Sector: Brains Are More Important than Computers

Author

Listed:
  • Georg Erber
  • Reinhard Madlener

Abstract

A conventional decomposition of the financial sector's gross value added growth into its various components indicates that investments in Information and Communication Technologies are highly important. However, a more comprehensive calculation reveals that growth is the result of - in particular - the increased deployment of medium-skilled labour, without whom the technological potential could not be fully realized. Further, productivity increases in the financial sector are also the result of value chains restructured in favour of external intermediate inputs. Case studies and microeconomic assumptions serve to confirm these relations.

Suggested Citation

  • Georg Erber & Reinhard Madlener, 2009. "Productivity in the Financial Sector: Brains Are More Important than Computers," Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 5(9), pages 55-61.
    • Handle: RePEc:diw:diwwrp:wr5-9
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    More about this item

    Keywords

    Financial service industries; Stochastic production possibility frontiers; Efficiency analysis; Growth accounting;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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