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

Table 2: Descriptive Statistics: ECU million (inflation-adjusted); 1996-2003

The aggregate Luenberger productivity indicators are calculated using linear
programming techniques. The results are presented in Table 3, with the productivity
indicators (AL) decomposed into its constituents: technical efficiency change (the diffusion or
catch-up component - EFFCH); and technological change (the innovation or frontier-shift
component - TECH). EFFCH represents the diffusion of best-practice technology in the
management of banking activities and it is attributable to investment planning, technical
experience, and management and organization. TECH results from innovations and the
adoption of new technologies by best-practice banks in each country.

From Table 3, we observe the productivity change score (AL) is positive for European
co-operative banks across all countries; all banking sectors experienced productivity gains
between 1996 and 2003. The mean is distorted by the result for Portugal; omitting the
Portuguese score yields a mean productivity score of 0.2073 that is bettered by the co-
operative banking sectors in Italy, Spain, Finland and France, and which is consistent with the

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