Total Factor Productivity and Shareholder Returns in Banking
AbstractThis paper examines shareholder value drivers in European banking focusing on the efficiency and productivity features of individual banks. In particular, we analyse the value relevance of bank cost efficiency and total factor productivity (TFP) (in all its components, including technological change, pure technical efficiency change and scale efficiency change) to see how these influence shareholder value creation in European banking. The paper focuses on the French, German, Italian and UK banking systems over the period 1995-2002 and includes both listed and non-listed banks. We find that TFP changes best explain variations in shareholder value (measured by market adjusted returns, MAR, for listed banks and by the ratio of EVAbkg to invested capital at time t-1 for non-listed banks). In both samples, we also find that technological change seems to be the most important component of TFP influencing shareholder value creation in European banking.
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Bibliographic InfoPaper provided by Bangor Business School, Prifysgol Bangor University (Cymru / Wales) in its series Working Papers with number 10005.
Length: 35 pages
Date of creation: Feb 2010
Date of revision:
Value-relevance; shareholder value; Data Envelopment Analysis (DEA); Malmquist productivity index; Banking;
Other versions of this item:
- Fiordelisi, Franco & Molyneux, Phil, 2010. "Total factor productivity and shareholder returns in banking," Omega, Elsevier, Elsevier, vol. 38(5), pages 241-253, October.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
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