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Cost and Technical Change : Effects from Bank Deregulation, Working Paper 90-05

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Cost and Technical Change : Effects from Bank Deregulation, Working Paper 90-05

DATE: June 1990

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ABSTRACT: Banks were substantially deregulated during the 1980s. Interest costs rose faster than operating expenses (capital, labor) were reduced. As a result, measured technical change in banking was negative: it averaged -0.8% to -1.4% a year over 1977-1988. Technical change was measured three different ways and for both equilibrium and disequilibrium factor input specifications. All three approaches -- a standard time trend, an index approach, and shifts in cross-section cost functions -- gave consistent results. These results were robust whether measured at the banking firm or office level, or at the cost frontier.

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Humphrey, David B. "Cost and Technical Change : Effects from Bank Deregulation, Working Paper 90-05," Working Papers (Federal Reserve Bank of Richmond) (June 1990). https://fraser.stlouisfed.org/title/3942/item/477036, accessed on April 19, 2024.

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NOTE: This is a preprint of an article published in the Journal of Productivity Analysis, June 1993, v. 4, iss. 1-2, pp. 9-24.

PUBLISHER: Federal Reserve Bank of Richmond

PLACE: Richmond

DIGITAL COPY SOURCE: Federal Reserve Bank of Richmond

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RIGHTS: In Copyright (InC)

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