Conference Paper
What Are the Main Sources of Bank’s Productivity in the GCC: Some Evidence Using a Semiparametric Cost Model
No.
ERF30_79
Publisher
ERF
Date
March, 2024
A semiparametric cost frontier model is used to estimate TFP growth and its components in the GCC banking sector, over the period 2000-2018. Inefficiency component is decomposed into persistent and transient inefficiency. It is shown that annual TFP growth rate is low, quite 0.9% driven mostly by technological change while scale change and efficiency change are quite inexistent. We show that half of the bank cost inefficiency is persistent. We also find significant differences in bank’s persistent efficiency between Islamic and conventional banks for some countries, but quite weak differences in TFP’s by bank type. We further look at the potential determinants of TFP’s and its components including oil prices impact.
Research Fellows
Mohamed El Arbi Chaffai
Professor of Econometrics, University of Sfax