Robust Estimation of Productivity Changes in Japanese Shinkin Banks

Abstract

This paper estimates productivity changes in Japanese shinkin banks during the fiscal years 2001 to 2008 using the Malmquist index as the measure of productivity change. Data envelopment analysis (DEA) is used to estimate the index. We also apply a smoothed bootstrapping approach to set up confidence intervals for estimates and study their statistical characteristics. By analyzing estimated scores, we identify trends in productivity changes in Japanese shinkin banks during the study period and investigate the sources of these trends. We find that in the latter half of the study period, productivity has significantly declined, primarily because of deterioration in technical efficiency, but scale efficiency has been significantly improved. Grouping the total sample according to the levels of competition reveals more details of productivity changes in shinkin banks.

Keywords

• Productivity
• Banking
• DEA
• Smoothed Bootstrapping
• Japan.