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Efficiency of labour use in the Swedish banking industry: a stochastic frontier approach

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Author Info

  • George E. Battese

    ()
    (School of Economic Studies, University of New England, Armidale, NSW 2351, AUSTRALIA)

  • Lennart Hjalmarsson

    ()
    (Department of Economics, Göteborg University, P.O. Box 640, SE 405 30 Göteborg, SWEDEN)

  • Almas Heshmati

    ()
    (Department of Economic Statistics, Stockholm School of Economics, Box 6501, S-113 83, Stockholm, SWEDEN)

Abstract

The purpose of this paper is to analyse the impact of the deregulation of the Swedish banking industry in the mid-1980s, and the consequent banking crisis, on productive efficiency and productivity growth in the industry. An unbalanced panel of Swedish banks is studied over the period, 1984 to 1995. A total of 1275 observations are analysed for 156 banks that were observed for between two and twelve years. We adopt a translog stochastic frontier model to estimate the labour-use requirements in terms of the variables, loans, deposits, guarantees, number of branches and total inventories, together with the year of observation. The inefficiency effects in the labour-use frontier are modelled in terms of the number of branches, total inventories, the type of bank and year of observation. The technical inefficiencies of labour use of Swedish banks were found to be significant, with mean inefficiencies per year estimated to be between about 8 and 15 per cent over the years of study. However, the confidence interval predictions for these inefficiencies were found to be quite wide.

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Bibliographic Info

Article provided by Springer in its journal Empirical Economics.

Volume (Year): 25 (2000)
Issue (Month): 4 ()
Pages: 623-640

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Handle: RePEc:spr:empeco:v:25:y:2000:i:4:p:623-640

Note: received: August 1998/Final version received: April 2000
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Related research

Keywords: Labour demand · labour-use · technical efficiency · banking industry;

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Cited by:
  1. Ajibefun, Igbekele A., 2006. "Linking Socio-Economic and Policy Variables to Technical Efficiency of Traditional Agricultural Production: Empirical Evidence from Nigeria," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25535, International Association of Agricultural Economists.
  2. Michael D. Rosko, 2001. "Cost efficiency of US hospitals: a stochastic frontier approach," Health Economics, John Wiley & Sons, Ltd., vol. 10(6), pages 539-551.
  3. Sipilainen, Timo & Oude Lansink, Alfons G.J.M., 2005. "Learning in Organic Farming – An Application on Finnish Dairy Farms," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24493, European Association of Agricultural Economists.
  4. Behr, Andreas & Tente, Sebastian, 2008. "Stochastic frontier analysis by means of maximum likelihood and the method of moments," Discussion Paper Series 2: Banking and Financial Studies 2008,19, Deutsche Bundesbank, Research Centre.
  5. Iain Fraser & William C. Horrace, 2002. "Technical Efficiency of Australian Wool Production: Point and Confidence Interval Estimates," Public Economics 0206001, EconWPA, revised 11 May 2003.
  6. Masso, Jaan & Heshmati, Almas, 2003. "The Optimality and Overuse of Labour in Estonian Manufacturing Enterprises," IZA Discussion Papers 884, Institute for the Study of Labor (IZA).
  7. Omer, Amani A. & Pascual, Unai & Russell, Noel P., 2005. "The Economics of Biodiversity Conservation in Agricultural Transition," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24636, European Association of Agricultural Economists.
  8. Hulusi Inanoglu & Mahmoud A. El-Gamal, 2005. "Inefficiency and heterogeneity in Turkish banking: 1990-2000," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(5), pages 641-664.

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