Abstract
The Luenberger productivity indicator is employed to estimate and decompose productivity change in a sample of cooperative banks operating in 10 EU member states. An average annualised productivity growth of 2.59% is reported between 1996 and 2003, though there is heterogeneity in growth rates across countries. Generally speaking, productivity growth is driven by technological change. However, cooperative banks in southern European banking markets benefit as much from efficiency growth or catching‐up with industry best practice. The results suggest that technology sharing arrangements and greater competition arising from deregulation are positive contributors towards productivity change.
Notes
1. See the reviews of Berger and Humphrey (Citation1997) and Casu, Girardone, and Molyneux (Citation2004).
2. For further elaboration on productivity measurement by ratios (indexes) and differences (indicators), see Chambers (Citation1996, Citation2002) and Diewert (Citation2000, Citation2005).
3. See Grosskopf (Citation2003) on the decomposition of productivity measures under different assumptions on returns to scale.
4. So far as we are aware, the only other application of the Luenberger indicator to banking is Park and Weber’s (Citation2006) application to Korean banks.
5. All the computations are programmed in Mathematica language with the Mathematica 5.0 software.
6. We simplify the notations by posing zt = (xt , yt ).
7. Färe and Primont (Citation2003) and Färe and Grosskopf (Citation2004) discuss the aggregation of the Luenberger indicator.