Productivity growth, market structure, and technological change: evidence from the rural banking sector

Abstract

Linear programming techniques are used to estimate the Malmquist productivity index for the US rural banking sector over the period 1990 to 1993. The index decomposes productivity growth into pure technical efficiency change, scale efficiency change, and technological change. Rural bank productivity growth for the three-year period averaged 11% and was attributed to technological change rather than pure technical change or scale change. Although market structure and state banking regulations affected productivity components, they were offsetting, resulting in a small and mainly insignificant effect on overall productivity growth.