Banks efficiency and productivity in Togo after the financial liberalization: a combined Malmquist index approach

ABSTRACT

The objective of this study is to analyze the productivity growth of Togolese banks. The study period (2000–2008) corresponds to the post-financial liberalization in the West African Economic and Monetary Union (WAEMU) zone and the third phase of a changed banking and financial environment. We develop a new combined Malmquist index based on ‘P-index II’ in order to estimate the total factor productivity (TFP) growth and its components. The empirical results show that the TFP has considerably increased for the whole industry, in which technical change is found to be a more important source of productivity growth to Togolese banks compared to efficiency change. In line with this, it is indicated that the financial liberalization does not improve the technical efficiencies of banks in Togo on a whole.

KEYWORDS:

• Data envelopment analysis (DEA)
• Togo banks
• anti-efficient frontier
• combined Malmquist index
• performance evaluation

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [grant number 71371067], [grant number 71431008]; and Hunan Provincial Natural Science Foundation of China [grant number 2017JJ1012].