Integration, productivity and technological spillovers: Evidence for eurozone banking industries

Abstract

This is the accepted version of the paper.This version of the publication may differ from the final published version. Permanent repository link ABSTRACTIn the context of the current debate on increased integration of eurozone banking markets following the global financial and sovereign debt crises, this paper evaluates the impact of regulatory reform, starting from the inception of the Single Market in 1992, on bank productivity and assesses the cross-border benefits of integration in terms of technological spillovers. We utilise a parametric meta-frontier Divisia index to estimate productivity change and identify technological gaps. We then assess the extent to which productivity converges within and across banking industries as a result of technological spillovers. Our results suggest that productivity growth has occurred for eurozone countries, driven by technological progress, both at the country and the supra-country level, although the latter slows or in some cases reverses since the onset of the crisis. Technological spillovers do exist, and have led to progression toward the best technology. However, convergence is not complete and significant long run differences in productivity persist. Improvements in technology are increasingly concentrated in fewer banking industries.

Bank productivity growth and convergence in the European Union during the financial crisis

“…Battese et al, 2000;Kumbhakar et al, 2001) or in an international institutional setting (e.g. Casu et al, 2004;Brissimis et al, 2010, Casu et al, 2016. Generally, these empirical findings advocate a declining technical efficiency but also suggest a technical progress and productivity growth for European Banks because of the liberalization process.…”

“…All data comes from the Bankscope database. (Casu et al, 2016). Therefore, it is more plausible to find a higher standard deviation for output variables such as loans and securities.…”

“…While they show the presence of club formation with weak convergence, they however do not find any evidence of convergence following the financial crisis. Recently, Casu et al (2016) examined the extent to which productivity converges within and across banking industries as a result of technological spillovers over the period 1992 to 2009 for EU-12 countries. They find evidence of technological spillovers that have led to progression toward the best technology, but also the existence of persistent differences in productivity.…”

What Causes the Efficiency and the Technology Gap Under Different Ownership Structures in the Chinese Banking Industry?

“…The policy appears to be successful in improving banks' 9. We also conduct an extension analysis with respect to β-convergence and σ-convergence according to the methodology employed by Casu et al (2016). Evidence shows that banks in China not only are moving progressively toward higher efficiency, but also toward the use of more advance technology.…”

Productivity and efficiency analysis using DEA: Evidence from financial companies listed in Bursa Malaysia

“…This is particularly interesting in cases of financial efficiency studies because the production frontier can shift upward or downward over time due to innovation, market structure, changes in regulatory policies, and shocks and severe financial disruptions. This explains the extensive application of total factor of productivity change in this strand of the literature (Portela & Thanassoulis, 2010;Duygun, et al, 2016;Casu et al, 2016, Fernandes et al, 2018Soteriou & Zenios, 1999). This paper is structured as follows.…”