Banks’ Efficiency and Productivity Analysis Using the Hicks-Moorsteen Approach: A Case Study of Iran
AbstractThis study is the first to use the Hicks-Moorsteen TFP index developed by O’Donnell (2008,2009, 2010c) to analyse efficiency and productivity changes in the banking system. The advantage of this approach over the popular Malmquist productivity index is that it is free from any assumptions concerning firm optimising behaviour, the structure of markets, or returns to scale. The effects of Iranian government regulations launched in 2005 on the Iranian banking industry are investigated through an analysis of performance over the period 2003-2008 assuming variable returns to scale. The results obtained show that although the Iranian banking industry has been inefficient over the entire period of the study, the industry’s technical efficiency level - which had improved over the period 2003-2006 - deteriorated considerably after the regulatory changes were introduced. The industry experienced its highest negative efficiency growth in 2006 which was 43% and became more mix inefficient after 2005, with a considerably negative productivity change after 2007. Overall, changes of production possibility set and scale efficiency changes exerted dominant effects on productivity changes.
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Bibliographic InfoPaper provided by School of Economics, University of Wollongong, NSW, Australia in its series Economics Working Papers with number wp10-11.
Length: 18 pages
Date of creation: 2010
Date of revision:
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Postal: School of Economics, University of Wollongong, Northfields Avenue, Wollongong NSW 2522 Australia
Phone: +612 4221-3659
Fax: +612 4221-3725
Web page: http://business.uow.edu.au/econ/index.html
More information through EDIRC
Regulation; Productivity; Banking; Data envelopment analysis; Malmquist index; Hicks-Moorsteen index;
Find related papers by JEL classification:
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-11-27 (All new papers)
- NEP-CWA-2010-11-27 (Central & Western Asia)
- NEP-EFF-2010-11-27 (Efficiency & Productivity)
- NEP-REG-2010-11-27 (Regulation)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- C.J. O'Donnell, 2008. "An aggregate quantity-price framework for measuring and Decomposing productivity and profitability change," CEPA Working Papers Series WP072008, School of Economics, University of Queensland, Australia.
- Christopher J. O'Donnell, 2012.
"Nonparametric Estimates of the Components of Productivity and Profitability Change in U.S. Agriculture,"
American Journal of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 94(4), pages 873-890.
- C.J. O'Donnell, 2010. "Nonparametric Estimates Of The Components Of Productivity And Profitability Change In U.S. Agriculture," CEPA Working Papers Series WP022010, School of Economics, University of Queensland, Australia.
- O'Donnell, Christopher J., 2009.
"Measuring And Decomposing Agricultural Productivity And Profitability Change,"
2009 Conference (53rd), February 11-13, 2009, Cairns, Australia
47625, Australian Agricultural and Resource Economics Society.
- O'Donnell, Christopher J., 2010. "Measuring and decomposing agricultural productivity and profitability change," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), December.
- C.J. O'Donnell, 2010. "DPIN Version 1.0: A Program for Decomposing Productivity Index Numbers," CEPA Working Papers Series WP012010, School of Economics, University of Queensland, Australia.
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