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Deregulation and Productivity: The Case of Spanish Banks

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Abstract

This paper deals with measuring total factor productivity (TFP) growth of financial institutions incorporating different types of deregulatory measures. TFP growth is decomposed into external, scale, and markup (in output prices) components. The contribution of the external component is further dissected into several types of deregulation and technical change components. We include the TFP growth relationship as an additional equation in estimating the cost system. The empirical model uses panel data on Spanish banks (savings and commercial), primarily because the Spanish banking sector went through rapid deregulatory changes. We find that deregulations, in general, contributed positively to TFP growth for both savings and commercial banks. Furthermore, domestic (European) deregulations had a greater effect on TFP growth of savings (commercial) banks.

Suggested Citation

  • Subal C. Kumbhakar & Ana Lozano-Vivas, 2004. "Deregulation and Productivity: The Case of Spanish Banks," Economic Working Papers at Centro de Estudios Andaluces E2004/24, Centro de Estudios Andaluces.
    • Handle: RePEc:cea:doctra:e2004_24
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    More about this item

    Keywords

    Total factor productivity; markup; deregulation; and technical change.;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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