A Measurement of Bank Efficiency, Ownership and Productivity Changes in Taiwan

This paper develops a non-parametric approach for measuring the relative operating efficiency of 34 commercial banks in Taiwan. As initial estimates indicate a lower level of technical efficiency in publicly-owned banks, this paper focuses on finding the main source of inefficiency and goes on to prove that it is due to pure technical efficiency rather than scale factor which exist in the publicly-owned banks. Finally, the above finding is confirmed using panel data and develop a Malmquist total factor productivity index to verify that there is a slight increase in the productivity of 34 banks.