Bank Productivity Change and Off-Balance-Sheet Activities Across Different Levels of Economic Development

This study analyses the impact of OBS on banking productivity growth using a sample of 752 banks from 87 countries to calculate their productivity growth between 1999 and 2006. Our international setting allows us to analyse differences on the performance on banking institutions among various groups of countries with different economic and financial innovations development. We estimate cost and profit productivity growth using a parametric approach that decomposes the change in costs and profit performance into a component due to changes in business conditions and a component due to changes in productivity. The latter one is decomposed further into the change in best practice and change in (in)efficiency