A Nonparametric Approach to Measurement of Efficiency and Technological Change: The Case of Large U.S. Commercial Banks
Journal of Financial Services Research (1990) 4:157-168
12 Pages Posted: 17 Jun 2014
Date Written: 1990
The purpose of this paper is to derive the efficiency measures and the rate of technological change for a sample of large U.S. commercial banks by employing a nonparametric technique. This technique is used to construct a multiproduct production frontier relative to which the efficiency measures, of the banks in the sample are calculated and the displacement of which over time provides a measure of the rate of technological change. The empirical results indicate that the relevant frontier shifted inward between 1980 and 1985 reflecting a high pace of technological advancement achieved by the banks in the sample. The pace varied significantly across the banks with some banks even regressing over time.
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