Productivity Growth in the Greek Banking Industry: A Non-Parametric Approach

Abstract

This paper investigates productivity growth and technical efficiency in the Greek banking industry for the period 1982–1997. It also compares the 1982–92 and 1993–97 sub-periods, since after 1992 the Greek banking sector experienced substantial changes. The Malmquist productivity index and the DEA method are used to measure and decompose productivity growth and technical efficiency, respectively. Productivity growth is higher after 1992. Recent growth is mainly attributed to technical progress, while until 1992 growth is mainly attributed to improvements in efficiency. Furthermore, after 1992, pure efficiency is higher, and scale efficiency is lower, indicating that although banks achieved higher pure technical efficiency, they moved away from optimal scale. Finally, Tobit results show that size and specialization have positive effects on both pure and scale efficiency.

JEL classification codes:

• C61
• G21
• D24

Key words:

• Greek banking
• efficiency
• productivity growth
• Malmquist index
• DEA