Technical progress, inefficiency and productivity change in U.S. banking, 1984-1993
AbstractNumerous 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.
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Bibliographic InfoPaper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 1994-021.
Date of creation: 1996
Date of revision:
Publication status: Published in Journal of Money, Credit, and Banking, May 1999, 31(2), pp. 212-34
Other versions of this item:
- Wheelock, David C & Wilson, Paul W, 1999. "Technical Progress, Inefficiency, and Productivity Change in U.S. Banking, 1984-1993," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 31(2), pages 212-34, May.
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