Measuring the Development of Efficiency and Productivity of Banks in the Visegrad Group: An Application of Hicks-Moorsteen Total Factor Productivity index

  • Lucie Chytilová
Keywords: CCR model, VRS model, the Visegrad group, Hicks-Moorsteen TFP index, efficiency

Abstract

The research on the banking efficiency all around the world has been one of the main topics for the international financial sectors over the last years. The special case is in Europe. Some of the countries are in the European Union, where the European Commission creates the rules for safer and sounder financial sector in the region. In the past, these rules brought a lot of controversy whether they help all countries in the European Union or just some of them. The purpose of this article is to determine the development of different types of efficiencies for banking industry in the Visegrad Group. Generally, the development is measured by the Malmquist approach. In this article there is used different type of index – the Hicks-Moorsteen Total Factor Productivity (TFP) index. It is one of the alternative indexes. The results have showed that the model with the variable return to scale (VRS) assumption is better for the use in banking industry in the Visegrad Group, as this model is more precise about the results.

References

Arjomandi, A. et al. 2014. Analysing Banks' Intermediation and Operational Performance using the Hicks-Moorsteen TFP Index: The Case of Iran. Research in International Business and Finance, 40, 111–125.

BankScope. 2015. BankScope Database. [online]. [Accessed 2015, January 18].

Benston, G. J. 1965. Branch Banking and Economies of Scale. Journal of Finance, 20 (2), 312–331.

Caves, D. W. et al. 1982. The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity. Econometrica, 50, 1393–1414.

Coelli, T. J. and Rao, D. S. P. 2005. Total Factor Productivity Growth in Agriculture: A Malmquist Index Analysis of 93 Countries, 1980–2000. Agricultural Economics, 32, 115–134.

Fang, Y. et al. 2014. Bank Valuation in New EU Member Countries. Economic Systems, 38 (1), 55–72.

Färe, R. et al. 1992. Productivity Changes in Swedish Pharmacies 1980–1989: A Nonparametric Malmquist Approach. Journal of Productivity Analysis, 3, 85–101.

Farrell, M. J. 1957. The Measurement of Productive Efficiency. Journal of the Royal Statistical Society, 120, 253–281.

Hančlová, J. and Chytilová, L. 2015. The Impact of Inclusion of Non-Traditional Activities on Efficiencies in European Banking Industry using the CCR-I Model. Proceedings of the 11th International Conference on Strategic Management and its Support by Information Systems 2015, Uherské Hradiště, pp. 208–220.

Islam, N. et al. 2014. Broadacre Farm Productivity and Profitability in SouthWestern Australia. Australian Journal of Agricultural and Resource Economics, 58 (2), 147–170.

Kerstens, K. et al. 2010. Malmquist and Hicks-Moorsteen Productivity Indices: An Empirical Comparison Focusing on Infeasibilities. Hub Research Paper 2010/3, Hogeschool Universiteit Brussel, Brussel, Belgium.

Lyroudi, K. and Angelidis, D. 2006. Measuring Banking Productivity of the Most Recent European Union Member Countries: A Non-Parametric Approach. Journal of Economics and Business, IX (1), 37–57.

O'Donnell, C. J. 2010. Measuring and Decomposing Agricultural Productivity and Profitability Change. Australian Journal of Agricultural and Resource Economics, 54, 527–560.

O'Donnell, C. J. 2012. An Aggregate Quantity Framework for Measuring and Decomposing Productivity Change. Journal of Productivity Analysis, 38 (3), 255–272.

Ray, S. C. and Desli, E. 1997. Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries: Comment. American Economic Review, 87, 1033–1039.

Řepková, I. 2014. Efficiency of the Slovak Commercial Banks Applying the DEA Window Analysis. Economics and Management Engineering, 8 (5), 1320–1325.

Sealey, C. W. Jr. and Lindley, J. T. 1977. Inputs, Outputs, and a Theory of Production and Cost at Depository Financial Institutions. Journal of Finance, 32 (4), 1251–1266.

Stavárek, D. and Řepková, I. 2012. Efficiency in the Czech Banking Industry: A Nonparametric Approach. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, LX (2), 357–366.

Svitálková, Z. 2014. Comparison and Evaluation of Bank Efficiency in Austria and the Czech Republic. Journal of Competitiveness, 6 (2), 15–29.
Published
2016-11-01
Section
Articles