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Analysing banks’ intermediation and operational performance using the Hicks–Moorsteen TFP index: The case of Iran

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  • Arjomandi, Amir
  • Valadkhani, Abbas
  • O’Brien, Martin

Abstract

In order to analyse the impact of policy reforms on the performance of the banking sector in Iran we present a decomposition of the Hicks–Moorsteen Total Factor Productivity (TFP). This entails a comparison of both the intermediate and operating performances of different types of banks in the pre- and post-reform eras. Our results show that under the intermediation approach, state-owned banks (public banks) were considerably more efficient than private banks in the post-regulation period. In contrast, under the operating approach, private banks were fully technically efficient and mix efficient in both pre and post-reform eras. This paper highlights the importance of analysing performance from multiple perspectives. The findings reflect public banks’ mission to maximise loans to target groups while private banks are motivated more by financial profit.

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  • Arjomandi, Amir & Valadkhani, Abbas & O’Brien, Martin, 2014. "Analysing banks’ intermediation and operational performance using the Hicks–Moorsteen TFP index: The case of Iran," Research in International Business and Finance, Elsevier, vol. 30(C), pages 111-125.
  • Handle: RePEc:eee:riibaf:v:30:y:2014:i:c:p:111-125
    DOI: 10.1016/j.ribaf.2013.06.003
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    Cited by:

    1. Thilakaweera, Bolanda Hewa & Harvie, Charles & Arjomandi, Amir, 2016. "Branch expansion and banking efficiency in Sri Lanka’s post‐conflict era," Journal of Asian Economics, Elsevier, vol. 47(C), pages 45-57.
    2. Lucie Chytilová, 2016. "Measuring the Development of Efficiency and Productivity of Banks in the Visegrad Group: An Application of Hicks-Moorsteen Total Factor Productivity Index," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 2(1), pages 53-63, November.
    3. Salim, Ruhul & Arjomandi, Amir & Seufert, Juergen Heinz, 2016. "Does corporate governance affect Australian banks' performance?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 43(C), pages 113-125.
    4. Moradi-Motlagh, Amir & Babacan, Alperhan, 2015. "The impact of the global financial crisis on the efficiency of Australian banks," Economic Modelling, Elsevier, vol. 46(C), pages 397-406.

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