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Technical progress in Spanish banking: 1985-1994

Author

Listed:
  • Javier Quesada Ibáñez

    () (Instituto Valenciano de Investigaciones Económicas)

  • Joaquín Maudos Villarroya

    (Instituto Valenciano de Investigaciones Económicas)

  • José Manuel Pastor Monsálvez

    (Instituto Valenciano de Investigaciones Económicas)

Abstract

Over the last decade, the Spanish banking sector has undergone a radical structural change. The old bank statu quo has broken down due both to the impact of technical change and to a strong deregulation process, that has given way to a much freer and competitive economic environment. Similarly, the rapid and intensive diffusion of new technologies on information has modified the banking industry in an important way. The effect of these three phenomena (technical change, deregulation and increased competition) on production costs for the Spanish savings banks are the objectives of this study. We review three alternative econometric methods of approaching the impact of technical change. Since we have available an incomplete data panel and with the aim of checking on the possibility that each firm has a particular level of efficiency -captured by the fixed effect-, we estimate the function using both techniques, pooling data and panel data. In other words, we estimate a mean costs function (OLS estimator) as well as a frontier costs function (panel data techniques).We address the question of whether technical progress affects banks in a different way according to size and, finally, with the purpose of isolating our estimates of technical change from the evolution of financial costs and, therefore, of the role of competition and deregulation, we estimate a cost function using only operating costs. In this way we obtain a stricter measure of the impact of technical change. En la última década, el sector bancario español ha estado sometido a un radical cambio estructural. El viejo statu qua bancario se rompió debido al impacto del cambio técnico y al fuerte proceso desregulador. Adicionalmente, la rápida difusión de las nuevas tecnologías de la información ha modificado la industria bancaria de forma importante. El objetivo de este estudio es analizar el efecto de estos tres fenómenos (cambio técnico, desregulación e incremento de la competencia) en los costes de producción de las cajas de ahorro españolas. Para ello se utilizan tres métodos econométricos alternativos para analizar el impacto del cambio técnico.Ante la disponibilidad de datos de panel y con el objetivo de considerar la posibilidad de que cada empresa presente un nivel de eficiencia individual -recogido por el efecto fijo- se realizan las estimaciones considerando una función de costes media (estimador de MCO) así como una función de costes frontera (mediante técnicas de panel).Se analiza si el progreso técnico afecta a los bancos de manera diferente según su tamaño, finalmente, con el propósito de aislar las estimaciones del cambio técnico de la evolución de los costes financieros y, por tanto, de la competencia y desregulación, se estima una función de costes utilizando sólo los costes operativos. De esta forma se obtiene una medida más estricta del impacto del cambio técnico.

Suggested Citation

  • Javier Quesada Ibáñez & Joaquín Maudos Villarroya & José Manuel Pastor Monsálvez, 1996. "Technical progress in Spanish banking: 1985-1994," Working Papers. Serie EC 1996-06, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  • Handle: RePEc:ivi:wpasec:1996-06
    as

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    File URL: http://www.ivie.es/downloads/docs/wpasec/wpasec-1996-06.pdf
    File Function: Fisrt version / Primera version, 1996
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    References listed on IDEAS

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    1. Loretta J. Mester, 1989. "Testing for Expense Preference Behavior: Mutual versus Stock Savings and Loans," RAND Journal of Economics, The RAND Corporation, vol. 20(4), pages 483-498, Winter.
    2. Berger, Allen N. & Humphrey, David B., 1991. "The dominance of inefficiencies over scale and product mix economies in banking," Journal of Monetary Economics, Elsevier, vol. 28(1), pages 117-148, August.
    3. Ferrier, Gary D. & Lovell, C. A. Knox, 1990. "Measuring cost efficiency in banking : Econometric and linear programming evidence," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 229-245.
    4. Berg, Sigbjorn Atle & Forsund, Finn R & Jansen, Eilev S, 1992. " Malmquist Indices of Productivity Growth during the Deregulation of Norwegian Banking, 1980-89," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages 211-228, Supplemen.
    5. Berger, Allen N. & Hanweck, Gerald A. & Humphrey, David B., 1987. "Competitive viability in banking : Scale, scope, and product mix economies," Journal of Monetary Economics, Elsevier, vol. 20(3), pages 501-520, December.
    6. Fare, Rolf & Knox Lovell, C. A., 1978. "Measuring the technical efficiency of production," Journal of Economic Theory, Elsevier, vol. 19(1), pages 150-162, October.
    7. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity," Econometrica, Econometric Society, vol. 50(6), pages 1393-1414, November.
    8. Elyasiani, Elyas & Mehdian, Seyed, 1992. "Productive efficiency performance of minority and nonminority-owned banks: A nonparametric approach," Journal of Banking & Finance, Elsevier, vol. 16(5), pages 933-948, September.
    9. José Manuel Pastor Monsálvez, 1995. "Eficiencia, Cambio Productivo Y Cambio Técnico En Los Bancos Y Cajas De Ahorro Españolas: Un Análisis Frontera No Paramétrico," Working Papers. Serie EC 1995-09, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    10. Aly, Hassan Y, et al, 1990. "Technical, Scale, and Allocative Efficiencies in U.S. Banking: An Empirical Investigation," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 211-218, May.
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    12. Berger, Allen N. & Hancock, Diana & Humphrey, David B., 1993. "Bank efficiency derived from the profit function," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 317-347, April.
    13. Rangan, Nanda & Grabowski, Richard & Aly, Hassan Y. & Pasurka, Carl, 1988. "The technical efficiency of US banks," Economics Letters, Elsevier, vol. 28(2), pages 169-175.
    14. Berg, Sigbjorn Atle & Forsund, Finn R. & Hjalmarsson, Lennart & Suominen, Matti, 1993. "Banking efficiency in the Nordic countries," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 371-388, April.
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    Cited by:

    1. Vicente Calabuig Alcantara, 1997. "Ineficiencias en las negociaciones entre dos agentes completamente informados," Working Papers. Serie EC 1997-03, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).

    More about this item

    Keywords

    Cambio técnico; eficiencia; bancos Technical change; efficiency; banks;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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