Productivity growth decomposition with FE-IV approach: Rethinking Thai commercial banks after the financial crisis
To cope with the Asian Financial Crisis, Thai commercial banks have gone through a reconstructing period. This study aims to decompose the Total Factor Productivity growth (TFP) for Thai commercial banking industry with an output distance function. With an unbalanced panel dataset, we used the Fixed Effect (FE) model with Instrumental Variables (IV) to estimate the TFP growth empirically. We found the technical inefficiency change and scale effects were the two major contributors to the recent growth, while the input price effect of the premises and equipment was the major preventer of the growth. Moreover, the Thai commercial banking industry produced in decreasing return to scale, and the input–output allocation was not at the profit maximization optimum under the exogenous prices.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
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.:
- Georgios Chortareas & Claudia Girardone & Alexia Ventouri, 2009. "Efficiency and productivity of Greek banks in the EMU era," Applied Financial Economics, Taylor & Francis Journals, vol. 19(16), pages 1317-1328.
- Matthews, Kent & Zhang, Nina (Xu), 2010. "Bank productivity in China 1997-2007: Measurement and convergence," China Economic Review, Elsevier, vol. 21(4), pages 617-628, December.
- Fadzlan Sufian, 2009. "Financial Disruptions and Bank Productivity Growth: Evidence from the Malaysian Experience," International Economic Journal, Taylor & Francis Journals, vol. 23(3), pages 339-369.
- Tai-Hsin Huang, 2005. "A Study on the Productivities of IT Capital and Computer Labor: Firm-level Evidence from Taiwan’s Banking Industry," Journal of Productivity Analysis, Springer, vol. 24(3), pages 241-257, November.
- Subal Kumbhakar & Dan Wang, 2007. "Economic reforms, efficiency and productivity in Chinese banking," Journal of Regulatory Economics, Springer, vol. 32(2), pages 105-129, October.
- Nakane, Marcio I. & Weintraub, Daniela B., 2005.
"Bank privatization and productivity: Evidence for Brazil,"
Journal of Banking & Finance,
Elsevier, vol. 29(8-9), pages 2259-2289, August.
- Márcio I. Nakane & Daniela B. Weintraub, 2004. "Bank Privatization and Productivity: Evidence for Brazil," Working Papers Series 90, Central Bank of Brazil, Research Department.
- Nakane, Marcio I. & Weintraub, Daniela B., 2005. "Bank privatization and productivity : evidence for Brazil," Policy Research Working Paper Series 3666, The World Bank.
- Giannis Karagiannis & Peter Midmore & Vangelis Tzouvelekas, 2004. "Parametric Decomposition of Output Growth Using A Stochastic Input Distance Function," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 1044-1057.
- Atkinson, Scott E. & Primont, Daniel, 2002. "Stochastic estimation of firm technology, inefficiency, and productivity growth using shadow cost and distance functions," Journal of Econometrics, Elsevier, vol. 108(2), pages 203-225, June.
- Sanzidur Rahman, 2010. "Women's Labour Contribution to Productivity and Efficiency in Agriculture: Empirical Evidence From Bangladesh," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(2), pages 318-342.
- Brissimis, Sophocles N. & Delis, Manthos D. & Papanikolaou, Nikolaos I., 2008. "Exploring the nexus between banking sector reform and performance: Evidence from newly acceded EU countries," Journal of Banking & Finance, Elsevier, vol. 32(12), pages 2674-2683, December.
- N. Papanikolaou & M. Delis & S. Brissimis, 2008. "Exploring the nexus between banking sector reform and performance: Evidence from newly acceded EU countries," DEOS Working Papers 0917, Athens University of Economics and Business.
- Sophocles N. Brissimis & Manthos D. Delis & Nikolaos I. Papanikolaou, 2008. "Exploring the Nexus between Banking Sector Reform and Performance: Evidence from Newly Acceded EU Countries," Working Papers 73, Bank of Greece.
- Gallant, A. Ronald, 1982. "Unbiased determination of production technologies," Journal of Econometrics, Elsevier, vol. 20(2), pages 285-323, November.
- Bernhard Brümmer & Thomas Glauben & Geert Thijssen, 2002. "Decomposition of Productivity Growth Using Distance Functions: The Case of Dairy Farms in Three European Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 628-644.
- Jiang, Chunxia & Yao, Shujie & Zhang, Zongyi, 2009. "The effects of governance changes on bank efficiency in China: A stochastic distance function approach," China Economic Review, Elsevier, vol. 20(4), pages 717-731, December.
- Shujie Yao & Chunxia Jiang, "undated". "The effects of governance changes on bank efficiency in China: A stochastic distance function approach," Discussion Papers 07/19, University of Nottingham, GEP.
- Isik, Ihsan & Kabir Hassan, M., 2003. "Financial deregulation and total factor productivity change: An empirical study of Turkish commercial banks," Journal of Banking & Finance, Elsevier, vol. 27(8), pages 1455-1485, August.
- Raymond J. Kopp, 1981. "The Measurement of Productive Efficiency: A Reconsideration," The Quarterly Journal of Economics, Oxford University Press, vol. 96(3), pages 477-503.
- Wooldridge, Jeffrey M., 1995. "Selection corrections for panel data models under conditional mean independence assumptions," Journal of Econometrics, Elsevier, vol. 68(1), pages 115-132, July.
- Scott E. Atkinson & Rolf Färe & Daniel Primont, 2003. "Stochastic Estimation of Firm Inefficiency Using Distance Functions," Southern Economic Journal, Southern Economic Association, vol. 69(3), pages 596-611, January.
- Cuesta, Rafael A. & Orea, Luis, 2002. "Mergers and technical efficiency in Spanish savings banks: A stochastic distance function approach," Journal of Banking & Finance, Elsevier, vol. 26(12), pages 2231-2247.
- Isidoro Guzman & Carmelo Reverte, 2008. "Productivity and efficiency change and shareholder value: evidence from the Spanish banking sector," Applied Economics, Taylor & Francis Journals, vol. 40(15), pages 2037-2044.
- David Saal & David Parker & Tom Weyman-Jones, 2007. "Determining the contribution of technical change, efficiency change and scale change to productivity growth in the privatized English and Welsh water and sewerage industry: 1985–2000," Journal of Productivity Analysis, Springer, vol. 28(1), pages 127-139, October.
- Tsionas, Efthymios G. & Lolos, Sarantis E. G. & Christopoulos, Dimitris K., 2003. "The performance of the Greek banking system in view of the EMU: results from a non-parametric approach," Economic Modelling, Elsevier, vol. 20(3), pages 571-592, May.
- Cliff Huang & Tsu-Tan Fu, 2009. "Uncertainty and total factor productivity in the Taiwanese banking industry," Applied Financial Economics, Taylor & Francis Journals, vol. 19(9), pages 753-766.
- Atkinson, Scott E & Cornwell, Christopher & Honerkamp, Olaf, 2003. "Measuring and Decomposing Productivity Change: Stochastic Distance Function Estimation versus Data Envelopment Analysis," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(2), pages 284-294, April.
- Sensarma, Rudra, 2006. "Are foreign banks always the best? Comparison of state-owned, private and foreign banks in India," Economic Modelling, Elsevier, vol. 23(4), pages 717-735, July.
- Semykina, Anastasia & Wooldridge, Jeffrey M., 2010. "Estimating panel data models in the presence of endogeneity and selection," Journal of Econometrics, Elsevier, vol. 157(2), pages 375-380, August.
- Anastasia Semykina & Jeffrey M. Woodridge, 2010. "Estimating Panel Data Models in the Presence of Endogeneity and Selection," Working Papers wp2010_10_01, Department of Economics, Florida State University.
- Mohamed Chaffai & Michel Dietsch & Ana Lozano-Vivas, 2001. "Technological and Environmental Differences in the European Banking Industries," Journal of Financial Services Research, Springer;Western Finance Association, vol. 19(2), pages 147-162, April.
- Koutsomanoli-Filippaki, Anastasia & Margaritis, Dimitris & Staikouras, Christos, 2009. "Efficiency and productivity growth in the banking industry of Central and Eastern Europe," Journal of Banking & Finance, Elsevier, vol. 33(3), pages 557-567, March.
- Rezitis, Anthony N., 2008. "Efficiency and productivity effects of bank mergers: Evidence from the Greek banking industry," Economic Modelling, Elsevier, vol. 25(2), pages 236-254, March.
- Robin Sickles & David Good & Lullit Getachew, 2002. "Specification of Distance Functions Using Semi- and Nonparametric Methods with an Application to the Dynamic Performance of Eastern and Western European Air Carriers," Journal of Productivity Analysis, Springer, vol. 17(1), pages 133-155, January.
- Nemoto, Jiro & Goto, Mika, 2005. "Productivity, efficiency, scale economies and technical change: A new decomposition analysis of TFP applied to the Japanese prefectures," Journal of the Japanese and International Economies, Elsevier, vol. 19(4), pages 617-634, December.
- Alexander Kondeas & Steven Caudill & Daniel Gropper & Jennie Raymond, 2008. "Deregulation and productivity changes in banking: evidence from European unification," Applied Financial Economics Letters, Taylor and Francis Journals, vol. 4(3), pages 193-197. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:28:y:2011:i:6:p:2579-2588. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If references are entirely missing, you can add them using this form.