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Bank ownership and productivity developments: evidence from Turkey

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  • Ihsan Isik

Abstract

Purpose - This paper analyzes the responsiveness of different ownership forms to changing business environment by drawing on Turkish experience. Design/methodology/approach - This study is conducted in two stages. In the first stage, the paper uses Malmquist index theory, to estimate the total factor productivity change, technological change, efficiency change, pure efficiency change and scale efficiency change indexes for the Turkish banks. In the second stage, utilizing the generalized least regression format, it examines the significance of the productivity differences between different ownership forms after controlling for size and changes in the macro-economy. Findings - Under the “traditional banking definition,” productivity growth during the period was 1.2 percent for state banks, 3.9 percent for private banks and 14.2 percent for foreign banks. Under the “non-traditional banking definition,” the productivity gain over the period was 2.9 percent for state banks, 9.5 percent for private banks and 17.0 percent for foreign banks. Research limitations/implications - The future research can extend the data set and may include more explanatory factors to characterize the bank forms that record the fastest productivity growth. Practical implications - Private ownership appears to be more adaptive to new environment. Foreign banks can be used as a policy instrument to induce efficiency and productivity improvements in local banking industries. Liberalization of markets through competition boosts economic performance. Originality/value - In analyzing impacts of reforms, the significance of inter-temporal change should be tested to better guide regulators, investors and managers.

Suggested Citation

  • Ihsan Isik, 2007. "Bank ownership and productivity developments: evidence from Turkey," Studies in Economics and Finance, Emerald Group Publishing, vol. 24(2), pages 115-139, June.
  • Handle: RePEc:eme:sefpps:v:24:y:2007:i:2:p:115-139
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    Citations

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    Cited by:

    1. Liu, Hsiang-Hsi & Huang, Chin-Wei & Chiu, Yung-Ho & Huang, Hsiao-Chin, 2015. "Using A Three Stage Super-Sbm Model To Analyze The Influence Of Bank'S Internationalization And Risk On The Operational Efficiency," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 56(2), pages 213-229, December.
    2. Fadzlan Sufian & Muzafar Shah Habibullah, 2010. "Financial Disruptions and the Evolution of Malaysian Banking Sector’s Efficiency: A Non-Stochastic Frontier Approach," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 166-186.
    3. Sanyal, Paroma & Shankar, Rashmi, 2011. "Ownership, competition, and bank productivity: An analysis of Indian banking in the post-reform period," International Review of Economics & Finance, Elsevier, vol. 20(2), pages 225-247, April.

    More about this item

    Keywords

    Turkey; Banks; Corporate ownership;

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