BIROn - Birkbeck Institutional Research Online

    A novel MIMIC-style model of European bank technical efficiency and productivity growth

    Izzeldin, M. and Mamatzakis, Emmanuel and Murphy, A. and Tsionas, M. (2020) A novel MIMIC-style model of European bank technical efficiency and productivity growth. Working Paper. Federal Reserve Bank of Dallas, Dallas, U.S..

    32528.pdf - Published Version of Record

    Download (650kB) | Preview


    Using Bayesian Monte Carlo methods, we augment a stochastic distance function measure of bank efficiency and productivity growth with indicators of capitalization, return and risk. Our novel Multiple Indicator-Multiple Cause (MIMIC) style model generates more precise estimates of policy relevant parameters such as returns to scale, technical inefficiency, and productivity growth. We find considerable variation in the performance of EU-15 banks over the period 2008-2015. For the vast majority of banks, productivity growth – the sum of efficiency and technical changes - is negative, implying that the industry would benefit from innovation. We show that greater technical efficiency is associated with higher profitability, higher capital, a lower probability of default and lower return volatility.


    Item Type: Monograph (Working Paper)
    Additional Information: Working paper #2012
    Keyword(s) / Subject(s): Multiple Indicators-Multiple Causes (MIMIC), technical efficiency, productivity growth, EU banks
    School: Other
    Divisions > Other

    Birkbeck Faculties and Schools > Faculty of Business and Law > Birkbeck Business School
    Research Centres and Institutes: Accounting and Finance Research Centre
    Depositing User: Emmanuel Mamatzakis
    Date Deposited: 16 Jul 2020 11:50
    Last Modified: 02 Aug 2023 18:01


    Activity Overview
    6 month trend
    6 month trend

    Additional statistics are available via IRStats2.

    Archive Staff Only (login required)

    Edit/View Item Edit/View Item