Determinants of Banks’ Total Factor Productivity: The Post-Asian Financial Crisis Experience of Thailand  

 

 The article present different structures of bank ownership that showed credit risk and diversification that carries negative impacts on Thailand bank’s total factor productivity. With early studies playing key roles arising from among Thailand economy, the pull out of investors, currency depreciations, higher interest rates; and large debt overhang is amongst some of the impact named. The Bank of Thailand (BOT) has qualified banking facilities with domestic commercial banks and foreign bank branches. The underlying factors the banking sector is essential for financial authorities. By using the whole gamut of commercial banks operating in Thailand, banking sector are contributing at least three important ways to focus on. The DEA based Malmquist Productivity Index (MPI) method, is a non-parametric and vented frontier sector adopted a dynamic panel of the MPI method. This is the methodological bias that can occur when only one method is used (see the exchange between Evans and Heckman (1988) and Charnes et al. ( 1988). Banker Sectors are relatively scarce. With the earlier studies suggests on the efficiency of Thailand, bank sectors found mixed performance of the foreign owned banks during the period of 1989 to 1994. The large domestically owned banks was suggested to be most sufficient than the smaller domestic owned banks, which was found to be more inefficient.  In this study, there are several distinct advantages over the Fischer and Torqvist that was pointed out by Grifell- Tortje and Lowell (1996). The constant returns to scale (CRS) shows the production technology is assumed to observed levels of its inputs. In banking theory literature, these are two approaches used in competing with this theory: (1) the production approach (2) the intermediation approach (Sealey and Lindley, 1977). According to Sealey and Lindley (1977), a variation of the intermediation approach adopted the definitions of inputs and outputs used. The production approach according to Berger and Humphrey (1997) is more suitable for branch efficiency studies under the control of branches.

 

Work CitedBourke, P. (1989), “Concentration and Other Determinants of Bank Profitability in Europe, North America and Australia, “Journal of Banking and Finance” 13,65-79.