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Financial center productivity and innovation prior to and during the financial crisis

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  • Claudia Curi
  • Ana Lozano-Vivas
Abstract
This paper assesses and tests the response of banks operating in financial centers to the financial crisis by investigating the actual productivity change and its components—pure efficiency change, scale efficiency change and technological change (innovation). The heterogeneity in the organizational form and size of banks has been represented with the Aggregated Malmquist Productivity Index (Zelenyuk in Eur J Oper Res 174:1076–1086, 2006 ) and the bootstrap techniques (Simar and Wilson in Eur J Oper Res 115:459–471, 1999 ) extended to this index. Our findings indicate that both branch and subsidiary banks respond to the financial crisis with productivity improvements and, in both cases, this improvement is driven primarily by a positive technical change. However, the branch banks outperform the subsidiary banks. In addition, for the three categories of big, medium and small banks, we find a positive productivity reaction to the crisis, driven by a technical change. However, because small banks not only respond to the financial crisis with improvements in the technical change but also in the scale efficiency change, they appear to reach a higher productivity growth, compared with larger banks, as a response to the financial crisis. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Claudia Curi & Ana Lozano-Vivas, 2015. "Financial center productivity and innovation prior to and during the financial crisis," Journal of Productivity Analysis, Springer, vol. 43(3), pages 351-365, June.
    • Handle: RePEc:kap:jproda:v:43:y:2015:i:3:p:351-365
    DOI: 10.1007/s11123-015-0434-2
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    Cited by:

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    2. Li, Yang, 2020. "Analyzing efficiencies of city commercial banks in China: An application of the bootstrapped DEA approach," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
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    4. Duygun, Meryem & Sena, Vania & Shaban, Mohamed, 2016. "Trademarking activities and total factor productivity: Some evidence for British commercial banks using a metafrontier approach," Journal of Banking & Finance, Elsevier, vol. 72(S), pages 70-80.
    5. Kourtzidis, Stavros & Matousek, Roman & Tzeremes, Nickolaos G., 2021. "Modelling a multi-period production process: Evidence from the Japanese regional banks," European Journal of Operational Research, Elsevier, vol. 294(1), pages 327-339.
    6. Gabriel A. Ogunmola & Fengsheng Chien & Ka Yin Chau & Li Li, 2022. "The Influence of Capital Requirement of Basel III Adoption on Banks’ Operating Efficiency: Evidence from U.S. Banks," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 11(2), pages 5-26.
    7. Binlei Gong & Robin C. Sickles, 2020. "Non-structural and structural models in productivity analysis: study of the British Isles during the 2007–2009 financial crisis," Journal of Productivity Analysis, Springer, vol. 53(2), pages 243-263, April.
    8. Yung-Hsiang LU & Shun-Ching WANG & Chih-Hung YUAN, 2017. "Financial crisis and the relative productivity dynamics of the biotechnology industry: Evidence from the Asia-Pacific countries," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 63(2), pages 65-79.

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    More about this item

    Keywords

    Financial center; Bank productivity; Innovation; Data envelopment analysis; Aggregated Malmquist Productivity Index; Sensitivity analysis; Financial crisis; C14; D24; G01; G21; F23;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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