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The contribution of product mix versus efficiency and technical change in US banking

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  • Asaftei, Gabriel

Abstract

Similar to a Du Pont analysis, this paper divides the changes in returns on assets of US commercial banks for the period from 2000 to 2005 into conventional measures of bank performance. The contribution of product mix is significant and offsets losses from technical change and operating efficiency. Banks respond to changes in the business environment by switching towards more lucrative traditional and nontraditional products. Large banks are found to benefit more than community banks from the switch to an optimal output portfolio mix including new products spawned by recent financial innovations and deregulation.

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  • Asaftei, Gabriel, 2008. "The contribution of product mix versus efficiency and technical change in US banking," Journal of Banking & Finance, Elsevier, vol. 32(11), pages 2336-2345, November.
    • Handle: RePEc:eee:jbfina:v:32:y:2008:i:11:p:2336-2345
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    Cited by:

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    2. Portela, Maria C.A.S. & Thanassoulis, Emmanuel, 2010. "Malmquist-type indices in the presence of negative data: An application to bank branches," Journal of Banking & Finance, Elsevier, vol. 34(7), pages 1472-1483, July.
    3. Li, Yang, 2020. "Analyzing efficiencies of city commercial banks in China: An application of the bootstrapped DEA approach," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
    4. Zhang, Jingfang & Malikov, Emir, 2022. "Off-balance sheet activities and scope economies in U.S. banking," Journal of Banking & Finance, Elsevier, vol. 141(C).
    5. Kontolaimou, Alexandra & Tsekouras, Kostas, 2010. "Are cooperatives the weakest link in European banking? A non-parametric metafrontier approach," Journal of Banking & Finance, Elsevier, vol. 34(8), pages 1946-1957, August.
    6. Carlos S�nchez-Gonz�lez & Jos� Luis Sarto & Luis Vicente, 2013. "The efficiency of Spanish mutual funds companies: A slacks-based measure approach," Documentos de Trabajo dt2013-01, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    7. Jradi, Samah & Bouzdine Chameeva, Tatiana & Aparicio, Juan, 2019. "The measurement of revenue inefficiency over time: An additive perspective," Omega, Elsevier, vol. 83(C), pages 167-180.
    8. Juo, Jia-Ching & Fu, Tsu-Tan & Yu, Ming-Miin & Lin, Yu-Hui, 2015. "Profit-oriented productivity change," Omega, Elsevier, vol. 57(PB), pages 176-187.
    9. Zhao, Tianshu & Casu, Barbara & Ferrari, Alessandra, 2010. "The impact of regulatory reforms on cost structure, ownership and competition in Indian banking," Journal of Banking & Finance, Elsevier, vol. 34(1), pages 246-254, January.
    10. Juo, Jia-Ching & Fu, Tsu-Tan & Yu, Ming-Miin & Lin, Yu-Hui, 2016. "Non-radial profit performance: An application to Taiwanese banks," Omega, Elsevier, vol. 65(C), pages 111-121.
    11. Jia-Ching Juo, 2014. "Decomposing the change in profit of Taiwanese banks: incorporating risk," Journal of Productivity Analysis, Springer, vol. 41(2), pages 247-262, April.
    12. Eling, Martin & Luhnen, Michael, 2010. "Efficiency in the international insurance industry: A cross-country comparison," Journal of Banking & Finance, Elsevier, vol. 34(7), pages 1497-1509, July.

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