A Note on Productivity Change in European Co-operative Banks: The Luenberger Indicator Approach

provided by Research Papers in Economics

A Note on Productivity Change in European Co-operative Banks:
The Luenberger Indicator Approach

Carlos Pestana Barros^a; Nicolas Peypoch ^b and Jonathan Williams^c

a Instituto Superior de Economia e Gestao, Technical University of Lisbon, Rua Miguel Lupi, 20,1249-068
Lisbon, Portugal, [email protected]

b GEREM, Département des Sciences Economiques et de Gestion, Université de Perpignan, 52 avenue Paul
Alduy, F-66860 Perpignan, France, [email protected]

c Centre for Banking and Finance, Bangor Business School, University of Wales, Bangor, Gwynedd, UK, LL57
2DG. [email protected]

Abstract:

This paper proposes a framework for benchmarking European co-operative banks and the
rationalization of their operational activities. The analysis is based on the Luenberger
productivity indicator. A key advantage of this method is that it allows for both input
contraction and output expansion in determining relative efficiencies and productivity
changes. Benchmarks are provided for improving the operations of those banks which
perform worse than others. Several interesting and useful managerial insights and
implications arise from the study. The general conclusion is that, between 1996 and 2003,
productivity increased for the majority of European co-operative banks analyzed.

Keywords: Europe; Co-operative banks; Luenberger productivity indicator.

JEL Classification: G21, D24

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