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Efficiency of Labour Use in the Swedish Banking Industry: A Stochastic Frontier Approach

Author

Listed:
  • Battese, George E.

    (Department of Econometrics, University of New England)

  • Heshmati, Almas

    (Dept. of Economic Statistics, Stockholm School of Economics)

  • Hjalmarsson, Lennart

    (Department of Economics, Göteborg University)

Abstract

The purpose of this paper is to analyse the impact of the deregulation of the Swedish banking industry in the mid-1980s, and the consequent banking crisis, on productive efficiency and productivity growth in the industry. An unbalanced panel of Swedish banks is studied over the period, 1984 to 1995. A total of 1275 observations are analysed for 156 banks that were observed for between two and twelve years. We adopt a translog stochastic frontier model to estimate the labour-use requirements in terms of the variables, loans, deposits, guarantees, number of branches and total inventories, together with the year of observation. The inefficiency effects in the labour-use frontier are modelled in terms of the number of branches, total inventories, the type of bank and year of observation.

Suggested Citation

  • Battese, George E. & Heshmati, Almas & Hjalmarsson, Lennart, 1998. "Efficiency of Labour Use in the Swedish Banking Industry: A Stochastic Frontier Approach," SSE/EFI Working Paper Series in Economics and Finance 289, Stockholm School of Economics, revised 13 Apr 1999.
    • Handle: RePEc:hhs:hastef:0289
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    Cited by:

    1. Ajibefun, Igbekele A., 2006. "Linking Socio-Economic and Policy Variables to Technical Efficiency of Traditional Agricultural Production: Empirical Evidence from Nigeria," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25535, International Association of Agricultural Economists.
    2. Jaan Masso & Almas Heshmati, 2004. "The optimality and overuse of labour in Estonian manufacturing enterprises," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(4), pages 683-720, December.
    3. Michael D. Rosko, 2001. "Cost efficiency of US hospitals: a stochastic frontier approach," Health Economics, John Wiley & Sons, Ltd., vol. 10(6), pages 539-551, September.
    4. Germán M. Izón & Chelsea A. Pardini, 2017. "Cost inefficiency under financial strain: a stochastic frontier analysis of hospitals in Washington State through the Great Recession," Health Care Management Science, Springer, vol. 20(2), pages 232-245, June.
    5. I. Fraser & W. Horrace, 2003. "Technical Efficiency of Australian Wool Production: Point and Confidence Interval Estimates," Journal of Productivity Analysis, Springer, vol. 20(2), pages 169-190, September.
    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. Hulusi Inanoglu & Mahmoud A. El-Gamal, 2005. "Inefficiency and heterogeneity in Turkish banking: 1990-2000," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(5), pages 641-664.
    8. Omer, Amani A. & Pascual, Unai & Russell, Noel P., 2005. "The Economics of Biodiversity Conservation in Agricultural Transition," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24636, European Association of Agricultural Economists.
    9. Sipilainen, Timo & Oude Lansink, Alfons G.J.M., 2005. "Learning in Organic Farming - An Application on Finnish Dairy Farms," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24493, European Association of Agricultural Economists.
    10. Behr, Andreas & Tente, Sebastian, 2008. "Stochastic frontier analysis by means of maximum likelihood and the method of moments," Discussion Paper Series 2: Banking and Financial Studies 2008,19, Deutsche Bundesbank.
    11. Fitzpatrick, Trevor & McQuinn, Kieran, 2004. "Cost Efficiency in UK and Irish Credit Institutions," Research Technical Papers 3/RT/04, Central Bank of Ireland.

    More about this item

    Keywords

    Labour demand; labour-use; technical efficiency; banking industry;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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