Title: Determinants of banks' total factor productivity: the post-Asian financial crisis experience of the Philippines

Authors: Fadzlan Sufian

Addresses: Khazanah Research and Investment Strategy, Khazanah Nasional Berhad, Level 35, Tower 2, Petronas Twin Towers Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia; Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia, 43400, SERDANG, Selangor Darul Ehsan, Malaysia

Abstract: The present paper employs the Malmquist Productivity Index (MPI) method to examine the sources of total factor productivity change of the Philippines banking sector during the period of 1998 to 2008. The empirical findings suggest that the Philippines banking sector has exhibited productivity regress due to technological regress. The results indicate that both the domestic and foreign banks have exhibited productivity regress due to technological regress rather than efficiency decline. We find that the more diversified Philippines banks tend to be less productive in their intermediation function. On the other hand, the relatively more productive Philippines banks are also the ones which are relatively more profitable. The results seem to suggest that the different structures of bank ownership have no significant impact on bank productivity.

Keywords: banking; total factor productivity; Sten Malmquist; productivity index; panel regression analysis; Philippines; financial crises; Asia; productivity regress; technological regress; domestic banks; foreign banks; efficiency decline; diversified banks; diversification; intermediation functions; profitability; bank ownership; ownership structures; sustained competitive advantage; global markets; business excellence.

DOI: 10.1504/IJBEX.2012.044574

International Journal of Business Excellence, 2012 Vol.5 No.1/2, pp.77 - 100

Available online: 29 Dec 2011 *

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