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Deregulation and Productivity: The Case of Spanish Banks

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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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Authors and Affiliations

  1. Department of Economics, State University of New York, Binghamton, 13902, New York

    Subal C. kumbhakar

  2. Dpto. de Teoría e Historia Económica, Facultad CC.EE., Universidad de Málaga, Plza. El Ejido s/n, 29013, Málage, Spain

    Ana Lozano-Vivas

Authors
  1. Subal C. kumbhakar
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  2. Ana Lozano-Vivas
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Correspondence to Subal C. kumbhakar.

Additional information

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

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