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RESEARCH PRODUCT

A bootstrap approach to analyse productivity growth in European banking

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This paper analyses productivity growth for European banks over the 1995–2001 period. In contrast to previous literature, our study covers the majority of current European Union (EU) countries—all except Greece and those joining the EU in 2004. We also use resampling methods so as to gain statistical precision, which turns out to be especially important due to the limitations of the database. In order to be consistent, we use additional nonparametric methods to disentangle why productivity differentials might exist. Results show that productivity growth has occurred in most countries, mainly due to improvements in production possibilities. The bootstrap analysis yields further evidence given that for many firms and countries productivity growth or decline is not statistically significant. The two-stage analysis provides some extra insights, suggesting that the relevance of environmental variables found in other studies focusing on efficiency could be lessened when focusing on productivity.