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

Marta Degl’Innocenti (Lead / Corresponding author), Stavros Kourtzidis, Zeljko Sevic, Nickolaos Tzeremes

    Research output: Contribution to journalArticle

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    Abstract

    This paper examines the bank productivity growth and integration process for the 28 EU countries during three main phases of the financial crisis: the U.S. subprime crisis (2007–2008), the global financial crisis (2009–2010) and the sovereign debt crisis (2010–2012). We extend the Malmquist Productivity Index by applying an additive two-stage DEA model. This allows us to explore the sources of growth in different stages of production. Furthermore, we assess the integration of European banks by analyzing the β-convergence and σ-convergence of the two-stage Productivity Index. Our results show a productivity growth during the U.S. subprime crisis, but a consistent decline during the global financial crisis. The loss of competitiveness of the European banking system is due to the drop in growth of the performance stage and technical change. Finally, we find a strong convergence pattern during the financial crisis, mainly driven by the catch up process of some Eastern countries and the drop in performance of Western countries.
    Original languageEnglish
    Pages (from-to)184-199
    Number of pages16
    JournalJournal of Banking and Finance
    Volume75
    Early online date15 Nov 2016
    DOIs
    Publication statusPublished - Feb 2017

    Fingerprint

    Financial crisis
    European Union
    Productivity growth
    Subprime crisis
    Global financial crisis
    Technical change
    Integration process
    Competitiveness
    Sovereign debt crises
    Catch-up
    European banking
    Productivity index
    DEA model
    Banking system
    Malmquist productivity index
    European banks
    EU countries

    Keywords

    • Banking
    • European Union
    • Data envelopment analysis
    • Two-stage
    • Productivity growth
    • Convergence

    Cite this

    Degl’Innocenti, Marta ; Kourtzidis, Stavros ; Sevic, Zeljko ; Tzeremes, Nickolaos. / Bank productivity growth and convergence in the European Union during the financial crisis. In: Journal of Banking and Finance. 2017 ; Vol. 75. pp. 184-199.
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    abstract = "This paper examines the bank productivity growth and integration process for the 28 EU countries during three main phases of the financial crisis: the U.S. subprime crisis (2007–2008), the global financial crisis (2009–2010) and the sovereign debt crisis (2010–2012). We extend the Malmquist Productivity Index by applying an additive two-stage DEA model. This allows us to explore the sources of growth in different stages of production. Furthermore, we assess the integration of European banks by analyzing the β-convergence and σ-convergence of the two-stage Productivity Index. Our results show a productivity growth during the U.S. subprime crisis, but a consistent decline during the global financial crisis. The loss of competitiveness of the European banking system is due to the drop in growth of the performance stage and technical change. Finally, we find a strong convergence pattern during the financial crisis, mainly driven by the catch up process of some Eastern countries and the drop in performance of Western countries.",
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    Bank productivity growth and convergence in the European Union during the financial crisis. / Degl’Innocenti, Marta (Lead / Corresponding author); Kourtzidis, Stavros; Sevic, Zeljko; Tzeremes, Nickolaos.

    In: Journal of Banking and Finance, Vol. 75, 02.2017, p. 184-199.

    Research output: Contribution to journalArticle

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    AU - Degl’Innocenti, Marta

    AU - Kourtzidis, Stavros

    AU - Sevic, Zeljko

    AU - Tzeremes, Nickolaos

    N1 - © 2016 Elsevier B.V. All rights reserved.

    PY - 2017/2

    Y1 - 2017/2

    N2 - This paper examines the bank productivity growth and integration process for the 28 EU countries during three main phases of the financial crisis: the U.S. subprime crisis (2007–2008), the global financial crisis (2009–2010) and the sovereign debt crisis (2010–2012). We extend the Malmquist Productivity Index by applying an additive two-stage DEA model. This allows us to explore the sources of growth in different stages of production. Furthermore, we assess the integration of European banks by analyzing the β-convergence and σ-convergence of the two-stage Productivity Index. Our results show a productivity growth during the U.S. subprime crisis, but a consistent decline during the global financial crisis. The loss of competitiveness of the European banking system is due to the drop in growth of the performance stage and technical change. Finally, we find a strong convergence pattern during the financial crisis, mainly driven by the catch up process of some Eastern countries and the drop in performance of Western countries.

    AB - This paper examines the bank productivity growth and integration process for the 28 EU countries during three main phases of the financial crisis: the U.S. subprime crisis (2007–2008), the global financial crisis (2009–2010) and the sovereign debt crisis (2010–2012). We extend the Malmquist Productivity Index by applying an additive two-stage DEA model. This allows us to explore the sources of growth in different stages of production. Furthermore, we assess the integration of European banks by analyzing the β-convergence and σ-convergence of the two-stage Productivity Index. Our results show a productivity growth during the U.S. subprime crisis, but a consistent decline during the global financial crisis. The loss of competitiveness of the European banking system is due to the drop in growth of the performance stage and technical change. Finally, we find a strong convergence pattern during the financial crisis, mainly driven by the catch up process of some Eastern countries and the drop in performance of Western countries.

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    KW - European Union

    KW - Data envelopment analysis

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