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

banks and encouraging a wave of M&A. However, this would need to be considered against
the role that smaller, local-oriented banks play in regional economic development.

Given that technological change (innovation) is the main driver of productivity growth
in the EU co-operative banking industry, an appropriate policy recommendation is for larger,
or centralized co-operative banks to develop and franchise technology to smaller, co-
operatives. Indeed, the group structure, which is a feature of co-operative and savings banks
sectors in Europe, is ideally suited for this strategy. However, the general conclusion is that
there is room for improvement in the management of European banks.

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Briec, W., 1997. A graph type extension of Farrell technical efficiency measure. Journal of
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industrial efficiency. Journal of Economics 79, 237-261.

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