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Total Factor Productivity of Thai Banks in 2007-2010: An Application of DEA and Malmquist Index

Author

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  • Thanh, Ngo
  • Linh Thi Phuong, Nguyen

Abstract

This research employs the Data Envelopment Analysis (DEA) and Malmquist index approaches to evaluate the efficiency and Total Factor Productivity (TFP) changes of Thai banking system in the period of 2007-2010 using panel data of 27 major banks in Thailand. This paper shows that the global crisis had a late effect on Thai banks as the TFP only dropped in 2010. While the local banks maintained their stable, foreign banks were more fluctuating – some improved their TFPs, some did not and become worst performers in the system. The reason behind it may relate to the fact that Thai banking system is currently running at decreasing returns to scale situation, which proposes that Thai banks are wasting resources in over-expansion. Hence, continuing to develop and restructuring the banking system is an emergence task for Thailand in the near future.

Suggested Citation

  • Thanh, Ngo & Linh Thi Phuong, Nguyen, 2012. "Total Factor Productivity of Thai Banks in 2007-2010: An Application of DEA and Malmquist Index," MPRA Paper 56391, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:56391
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    1. Bank for International Settlements, 2010. "The global crisis and financial intermediation in emerging market economies," BIS Papers, Bank for International Settlements, number 54.
    2. Fadzlan Sufian & Muzafar Shah Habibullah, 2010. "Developments in the efficiency of the Thailand banking sector: a DEA approach," International Journal of Development Issues, Emerald Group Publishing Limited, vol. 9(3), pages 226-245, September.
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    Cited by:

    1. Ayhan Aydın, 2022. "Benchmarking healthcare systems of OECD countries: A DEA - based Malmquist Productivity Index Approach," Alphanumeric Journal, Bahadir Fatih Yildirim, vol. 10(1), pages 25-40, June.
    2. Lema, Tadesse Zenebe, 2016. "Productivity change of Ethiopian banks: A malmquist productivity index approach," MPRA Paper 77969, University Library of Munich, Germany.
    3. Huang, Junbing & Cai, Xiaochen & Huang, Shuo & Tian, Sen & Lei, Hongyan, 2019. "Technological factors and total factor productivity in China: Evidence based on a panel threshold model," China Economic Review, Elsevier, vol. 54(C), pages 271-285.

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    More about this item

    Keywords

    Thai banking system; efficiency; data envelopment analysis; Malmquist index; Global financial crisis;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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