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Productivity and Technical Change in Malaysian Banking: 1989–1998

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  • Ergun Dogan
  • Dietrich Fausten

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Abstract

This study examines the impact of deregulation and technological change on the productivity of Malaysian banks over the period 1989–1998. Malmquist indices constructed with nonparametric DEA techniques are decomposed into their pure efficiency, scale efficiency, and technological change components. Our findings indicate an erosion of banking productivity that masks divergent tendencies among its component elements. These are dominated by adverse effects of technological change, which are associated with a reduction in the labor intensity of banking activity. Consistent with the mixed findings reported in the literature, the present investigation suggests that regulatory reform and liberalization are not sufficient conditions for productivity improvement. Copyright Springer Science + Business Media, Inc. 2003

Suggested Citation

  • Ergun Dogan & Dietrich Fausten, 2003. "Productivity and Technical Change in Malaysian Banking: 1989–1998," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 10(2), pages 205-237, September.
  • Handle: RePEc:kap:apfinm:v:10:y:2003:i:2:p:205-237
    DOI: 10.1007/s10690-005-6011-3
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    References listed on IDEAS

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    12. Bhattacharyya, Arunava & Lovell, C. A. K. & Sahay, Pankaj, 1997. "The impact of liberalization on the productive efficiency of Indian commercial banks," European Journal of Operational Research, Elsevier, vol. 98(2), pages 332-345, April.
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    1. repec:eee:finsta:v:30:y:2017:i:c:p:67-78 is not listed on IDEAS
    2. Muliaman Hadad & Maximilian Hall & Karligash Kenjegalieva & Wimboh Santoso & Richard Simper, 2011. "Banking efficiency and stock market performance: an analysis of listed Indonesian banks," Review of Quantitative Finance and Accounting, Springer, vol. 37(1), pages 1-20, July.
    3. Qayyum, Abdul & Ahmad, Munir, 2006. "Efficiency and Sustainability of Micro Finance," MPRA Paper 11674, University Library of Munich, Germany.
    4. Rossazana Ab Rahim, 2016. "Does Competition Foster Efficiency? Empirical Evidence from Malaysian Commercial Banks," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 12(1), pages 1-23.
    5. Sufian, Fadzlan & Zulkhibri, Muhamed, 2011. "The Nexus between Economic Freedom and Islamic Bank Performance in the MENA Banking Sectors," MPRA Paper 51285, University Library of Munich, Germany.

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    Keywords

    banking; Malmquist index; Malaysia; productivity;

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