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Malmquist index analysis of the recent development of the Slovak banking sector from two different angles

Author

Listed:
  • Martin Boďa

    (Matej Bel University in Banská Bystrica)

  • Emília Zimková

    (Matej Bel University in Banská Bystrica)

Abstract

Filling the gap that exists in the extant research oriented on productivity and efficiency change of Slovak commercial banks, the paper aims to examine the productivity change and its nature that was effective in the Slovak banking sector in three subsequent sub-periods of its development from 2000 to 2012. In this effort, issues of banking production are interpreted from the standpoint of two competing approaches to banking behaviour, the production approach and the intermediation approach, which permits treating the core essence of banking production from two different angles and comparing results. To this end, the Malmquist index methodology developed originally for group performance comparison is extended and modified to quantify productivity change and decompose it into its sources for the situation when there are multi-year structurally different periods of economic development, between which production technology remains intact and free of structural shift. This methodology is utilized in conjunction with the non-oriented slacks-based model of Tone and with the decomposition of productivity change as proposed by Ray and Desli. Besides the fact that the Slovak banking sector recorded a productivity increase between the first sub-period (2000–2003) and the third sub-period (2009–2012) of its development, it is symptomatic that innovation capacity and espousal of new technologies was tied with large commercial banks and smaller banks were only able to follow up these tendencies. As to the difference between the two approaches, they differ especially in how they view improvement or deterioration of relative technical efficiency of individual banks over the investigated period from 2000 to 2012. This complies with the difference that naturally exists between financial intermediation and provision of banking services.

Suggested Citation

  • Martin Boďa & Emília Zimková, 2017. "Malmquist index analysis of the recent development of the Slovak banking sector from two different angles," Economic Change and Restructuring, Springer, vol. 50(2), pages 95-131, May.
    • Handle: RePEc:kap:ecopln:v:50:y:2017:i:2:d:10.1007_s10644-016-9183-0
    DOI: 10.1007/s10644-016-9183-0
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    Cited by:

    1. Martin Boďa & Mariana Považanová, 2020. "Productivity patterns in Europe: adaptation of the Malmquist index to measuring group performance and productivity change over time," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(4), pages 949-989, November.

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    More about this item

    Keywords

    Productivity change and its decomposition; The Malmquist index; The slacks-based model; Multi-year periods; The Slovak banking sector;
    All these keywords.

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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