Title: Productivity measurement of commercial banks in Malaysia with non-performing loans

Authors: Noor Asiah Ramli; S. Sarifah Radiah Shariff; Nurhayati Hamid

Addresses: Statistical and Decision Sciences Department, Faculty of Computer and Mathematical Sciences, Universiti Teknologi MARA, 40450 Shah Alam, Selangor, Malaysia ' Statistical and Decision Sciences Department, Faculty of Computer and Mathematical Sciences, Universiti Teknologi MARA, 40450 Shah Alam, Selangor, Malaysia ' Statistical and Decision Sciences Department, Faculty of Computer and Mathematical Sciences, Universiti Teknologi MARA, 40450 Shah Alam, Selangor, Malaysia

Abstract: In the banking sector, productivity has been considered essential to the development process. This study is determining the productivity of 20 commercial banks in Malaysia consisting of eight domestic banks and 12 foreign banks between the year 2005 and 2014. The Malmquist Luenberger productivity index (MLPI) approach is employed when incorporating undesirable output, i.e., non-performing loan. The productivity measured using MLPI shows that the foreign banks perform at a higher productivity change progression compared to domestic banks. The total geometric mean for productivity change in 2008/2009 is found to be the highest percentage of deterioration which is 17.4%, while the maximum progress of productivity is reported in 2010/2011 which is 25.2%. Overall, the finding exhibits that technological changes, i.e., the innovation effect is the main contributor to the productivity changes during the study period.

Keywords: efficiency change; Malmquist Luenberger productivity index; MLPI; productivity; productivity change; technological change; Malaysia.

DOI: 10.1504/GBER.2019.101865

Global Business and Economics Review, 2019 Vol.21 No.5, pp.666 - 682

Received: 22 May 2017
Accepted: 06 Nov 2017
Published online: 29 Aug 2019 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article