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Sources of Productivity Changes of Commercial Banks in Developing Economy: Evidence from Malaysia, 1998-2003

  • SUFIAN, Fadzlan


Applying a non-parametric Malmquist Productivity Index (MPI) method, this paper attempts to investigate the productivity changes of Malaysian banks during the post crisis period of 1998-2003. Our results suggest that: (1) Malaysian banking sector have exhibit productivity regress of 6.3% and that the productivity regressed during the period of study was largely attributed to Technological (6.1%) rather than Technical Efficiency (0.2%) regress. (2) Malaysian banks regardless of size have exhibit productivity regress ranging from 1.5% to as high as 10.0% and (3) The smallest bank in our sample is too small to reap the benefits of economies of scale, while the largest bank in our sample, is too large to be scale efficient.

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Article provided by Euro-American Association of Economic Development in its journal International Journal of Applied Econometrics and Quantitative Studies .

Volume (Year): 2 (2005)
Issue (Month): 3 ()
Pages: 87-100

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Handle: RePEc:eaa:ijaeqs:v:2:y2005:i:3_7
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  1. Hidenobu Okuda & Hidetoshi Hashimoto, 2004. "Estimating Cost Functions of Malaysian Commercial Banks: The Differential Effects of Size, Location, and Ownership ," Asian Economic Journal, East Asian Economic Association, vol. 18(3), pages 233-259, 09.
  2. Berg, Sigbjorn Atle & Forsund, Finn R & Jansen, Eilev S, 1992. " Malmquist Indices of Productivity Growth during the Deregulation of Norwegian Banking, 1980-89," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages S211-28, Supplemen.
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