Productivity Growth in Network Models: An Application to Banking During the Financial Crisis

Stavros Kourtzidis, Roman Matousek (Lead / Corresponding author), Nickolaos Tzeremes

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    Abstract

    We construct Malmquist Productivity indices for two-stage processes. A two-stage data envelopment analysis model with an additive efficiency decomposition is used for the modelling of the two-stage process. We incorporate prior information into the analysis using the Weight Assurance Region model. This model offers advantages such as the weights representing the contribution of each stage to the overall process are always positive and we also can restrict them into a region given the available prior information. We extend this model from efficiency analysis to productivity analysis and we calculate Malmquist Productivity indices using four alternative decomposition approaches. The model is applied to a panel of banks in Central and Eastern European countries and productivity change is evaluated for three periods of the financial crisis. The alternative decompositions allow us to examine the various sources of productivity change during the financial crisis. Convergence patterns are also examined.

    Original languageEnglish
    Pages (from-to)111-124
    Number of pages14
    JournalJournal of the Operational Research Society
    Volume70
    Issue number1
    Early online date7 Feb 2018
    DOIs
    Publication statusPublished - 2 Jan 2019

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    Keywords

    • Data envelopment analysis
    • banking efficiency
    • productivity growth
    • transition economies
    • two-stage

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