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 components. The external component is further dissected into deregulation and technical change components. The TFP growth relationship is included as an additional equation in estimating the cost system. The empirical model uses panel data on Spanish banks (savings and commercial banks). We find that deregulations 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.
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JEL Classification: D24, D40, G21
Lozano-Vivas acknowledges financial support from the Ministerio de Ciencia y Tecnología and FEDER grant n° BEC2002-02852. The authors thank an anonymous referee, the editor of the JRE and seminar participants at the XI International ‘‘Tor Vergata’’ Conference on Banking and Finance: Monetary Integration, Markets and Regulation (Rome, Italy) and at the Asian Pacific Productivity and Efficiency Conference (Taipei, Taiwan) for numerous suggestions. A previous version of this paper was distributed as working paper E2004/24, CentrA.
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kumbhakar, S.C., Lozano-Vivas, A. Deregulation and Productivity: The Case of Spanish Banks. J Regul Econ 27, 331–351 (2005). https://doi.org/10.1007/s11149-005-6627-2
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DOI: https://doi.org/10.1007/s11149-005-6627-2