Scandinavian Working Papers in Economics
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The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Economics and Finance

No 289:
Efficiency of Labour Use in the Swedish Banking Industry: A Stochastic Frontier Approach

George E. Battese (), Almas Heshmati () and Lennart Hjalmarsson

Abstract: The purpose of this paper is to analyse the impact of the deregulation of the Swedish banking industry in the mid-1980s, and the consequent banking crisis, on productive efficiency and productivity growth in the industry. An unbalanced panel of Swedish banks is studied over the period, 1984 to 1995. A total of 1275 observations are analysed for 156 banks that were observed for between two and twelve years. We adopt a translog stochastic frontier model to estimate the labour-use requirements in terms of the variables, loans, deposits, guarantees, number of branches and total inventories, together with the year of observation. The inefficiency effects in the labour-use frontier are modelled in terms of the number of branches, total inventories, the type of bank and year of observation.

Keywords: Labour demand; labour-use; technical efficiency; banking industry; (follow links to similar papers)

JEL-Codes: C23; D24; G21; (follow links to similar papers)

23 pages, December 1, 1998, Revised April 13, 1999

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This paper is published as:
Battese, George E., Almas Heshmati and Lennart Hjalmarsson, (2000), 'Efficiency of Labour Use in the Swedish Banking Industry: A Stochastic Frontier Approach', Empirical Economics, Vol. 25, No. 4, pages 623-640

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