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The impact of bank market competition and stability on bank total factor productivity changes: evidence from a panel of European Union banks

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  • Cândida Ferreira

Abstract

This paper contributes to the literature using first a Data Envelopment Analysis (DEA) approach to measure bank efficiency and the results provided by the Malmquist indices to analyse the evolution of the technical, technological, and scale efficiency changes, in a panel including 784 relevant banks of all the 27 European Union (EU) countries, between 2006 and 2021. In the second stage, the study uses panel dynamic Generalised Method of Moments (GMM) estimations to analyse the impact on the total productivity changes of bank market competition (measured with the estimated Boone indicator) and bank stability (proxied with the estimated Z-score), while controlling for some relevant bank activities, economic growth and the influence of the relevant crises that affected the EU banking sector during the considered period. The main findings reveal that while bank market competition looks like promoting the banks’ total factor productivity change, bank loans, bank deposits and short-term funding, as well as bank market stability and economic growth do not contribute to the banks’ total factor productivity changes.

Suggested Citation

  • Cândida Ferreira, 2024. "The impact of bank market competition and stability on bank total factor productivity changes: evidence from a panel of European Union banks," Working Papers REM 2024/0315, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    • Handle: RePEc:ise:remwps:wp03152024
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    File URL: https://rem.rc.iseg.ulisboa.pt/wps/pdf/REM_WP_0315_2024.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    European Union banking sector; Malmquist indices; bank total factor productivity changes; Z-score; Boone indicator.;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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