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What determines bank productivity? International evidence on the impact of banking competition, bank regulation, and the global financial crisis

Global Banking, Financial Markets and Crises

ISBN: 978-1-78350-170-0, eISBN: 978-1-78350-171-7

Publication date: 24 October 2013

Abstract

This chapter examines the impact of banking competition, bank regulation, and the global financial crisis (GFC) of 2008–2009 on banks’ productivity changes. For the empirical analysis, I apply a semi-parametric two-step approach of Malmquist index estimates and bootstrap regression to a cross-country panel data of 8,451 commercial banks from 82 countries over the period 2004–2012. Empirical results show that (1) banking competition and capital regulation significantly enhance bank productivity, (2) a tighter bank supervision have a positive impact on bank productivity, and (3) bank productivity decreases during the GFC, but starts to increase as the GFC recovers. I also present consistent evidence that commercial banks in countries with better national governance have higher productivity growth before, during and after the GFC.

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Acknowledgements

Acknowledgments

I gratefully acknowledge the financial support from National Science Council (NSC) of Taiwan (NSC-101-2410-H-343-005). I also thank for very helpful comments from Sergio Masciantonio, Dorota Skala, Malgorzata Pawlowska, and participants at the 2013 INFINITI Conference on International Finance (Aix-en-Provence, France) and the 2013 Taiwan Productivity and Efficiency Conference (Taipei).

Citation

Chen, S.-H. (2013), "What determines bank productivity? International evidence on the impact of banking competition, bank regulation, and the global financial crisis", Global Banking, Financial Markets and Crises (International Finance Review, Vol. 14), Emerald Group Publishing Limited, Leeds, pp. 141-171. https://doi.org/10.1108/S1569-3767(2013)0000014009

Publisher

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Emerald Group Publishing Limited