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Benchmarking and Total Factor Productivity: A Luenberger Decomposition within the Banking Sector

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  • Epure, Mircea
  • Kerstens, Kristiaan
  • Prior, Diego

Abstract

This paper has a dual aim. First, it analyses the total factor productivity of the Spanish banking sub-sectors throughout an eight-year time span. Second, derived from the Färe et al. (1994) Malmquist decomposition, it proposes a Luenberger indicator adapted to benchmarking purposes. Hence, by means of an application where the base period is an established reference unit, the indicator offers two types of measures: (1) benchmarking (total factor productivity and frontier indicators), and (2) static efficiency (technical efficiency as the sum of pure technical efficiency, scale economies and input congestion). Results show that benchmarks for private and savings banks have inferior scores than the mean sample level, while the ones for credit cooperatives are roughly equal to the sample mean. Moreover, new technologies are important in the sector as changes over time are all-significant for frontier shifts. Statically, the technical efficiency components demonstrate good organizational practices together with consistency over time.

Suggested Citation

  • Epure, Mircea & Kerstens, Kristiaan & Prior, Diego, 2008. "Benchmarking and Total Factor Productivity: A Luenberger Decomposition within the Banking Sector," Efficiency Series Papers 2008/03, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    • Handle: RePEc:oeg:wpaper:2008/03
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    References listed on IDEAS

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