Sigbjørn Atle Berg

Malmquist Indices of Productivity Growth during the Deregulation of Norwegian Banking, 1980-89

Productivity growth during the deregulation of the Norwegian banking industry is studied within the framework of data envelopment analysis, which explicitly allows for multiple outputs. Introducing Malmquist indices for productivity growth, total growth can be decomposed into frontier growth and change in each banks distance to the frontier. Both the total growth index and its components can be consistently chained over time. The authors find productivity regress at the average bank prior to the deregulation, but rapid growth when deregulation took place. Deregulation also led to less dispersion of productivity levels within the industry. Copyright 1992 by The editors of the Scandinavian Journal of Economics.

Banking efficiency in the Nordic countries

Abstract Evidence of the relative competitiveness of the banking industries in three Nordic countries is provided, by applying Data Envelopment Analysis of productivity on the national and the pooled data sets. The analysis produces a detailed account of how well banks from different countries and different sizes may be prepared to meet the more intense competition of a common European banking market.

Oligopolistic Interdependence and the Structure of Production in Banking: An Empirical Evaluation

The main purpose of this paper is to incorporate the oligopolistic nature of the banking industry into the (conventional) production model in order to contribute to the empirical literature on the structure, conduct and performance in banking and to achieve unbiased measures of scale economies and efficiency depending on which of the models is accepted by the data. This is done by appending behavioral equations specifying banks conjectures regarding the reactions of other banks to its output change. This formulation enables us to test for the correct type of behavioral model and relate it to the resulting estimated technology. If estimates of economies of scale and inefficiencies depend on the behavioral model adopted, other studies which ignore product market behavior may well be subject to misspecification errors. The paper also sheds light on the nature of the oligopolistic interdependence in the banking sector. Copyright 1994 by Ohio State University Press.

Technical efficiency of Norwegian banks: The non-parametric approach to efficiency measurement

The nonparametric frontier methodology is applied to a sample of banks, where output levels are measured either by the number of accounts and their average size, or by the total balances of the accounts. The efficiency rankings of individual banks are found to depend substantially on our choice of output metric, whereas the estimated size of potential productivity improvements in the banking sector are less affected. The results on economies of scale are also largely unchanged.

Banks as multioutput oligopolies: An empirical evaluation of the retail and corporate banking markets

The distinction between retail and corporate banking markets is of much importance in real life banking organizations. The two markets differ with respect to concentration, the importance of informational asymmetries, and the extent of customer mobility. Within a standard conjectural variation model estimated on cost efficient banks as well as on the full sample of banks, the authors empirically characterize the strategic behavior in each of these markets and also focus on cross market interactions to see whether initial moves in one market affect the equilibrium in the other market. They compare their findings to the predictions that would follow from merely considering concentration ratios, such as the Herfindahl index.

Systemic surcharges and measures of systemic importance

Purpose - There is an emerging consensus that systemically important banks should face stricter regulations and systemic surcharges. To make this latter principle operational the regulator will need to quantify the systemic importance of individual banks. The purpose of this paper is to review the proposed measures of systemic importance from the research community and discuss their merits relative to how a regulator would ideally wish to calibrate surcharges on systemically important banks, and to evaluate how useful proposed measures of the systemic importance of financial institutions will be to regulators. Design/methodology/approach - The author reviews the main contributions to the research literature and discusses their relevance for the problem faced by regulators. Findings - There are five main caveats that make the proposed measures of systemic importance less useful for regulators. Practical implications - The proposed measures may help identify relevant aspects of systemic importance, but the regulators will need to construct their own measures for practical use. Originality/value - The paper provides a critical review of a research literature that could potentially have large practical implications.