Disaggregation Analysis of Commercial Bank's Productivity Growth in Indonesia
16 Pages Posted: 25 Sep 2013
Date Written: September 25, 2013
This study investigates the sources of commercial bank’s productivity growth in Indonesia over period 2003-2011 using Input Slack-based Productivity Index (ISP) that disaggregates total factor productivity change into each input productivity change. Funds, capital, and number of employees are chosen as input variables, whereas loans and other earning assets are the outputs. By classifying bank based on total assets, this study finds that small banks show higher productivity growth than large banks, in which the growth is mainly driven by technical progress in capital management. Moreover, the productivity growth of large banks is mainly attributed to efficiency change in funds management.
Keywords: Bank, input slack-based productivity index, productivity growth, technical change, efficiency change
JEL Classification: G21
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