Cost Structure, Technological Change and Productivity Growth in the Greek Banking Sector

The purpose of this paper is fourfold: first to empirically investigate the cost structure of the Greek banking sector, second to provide measures of economies (diseconomies) of scale, third to quantify technical change and its sources, and fourth to measure total factor productivity growth and identify its sources. Bank production is presented with two different approaches (i.e. the 'intermediation' and the 'production') which are used in specifying a translog cost function. The two different translog cost models are estimated through the full information maximum likelihood method of estimation on pooled time series and cross sectional data. The results obtained are not significantly affected by model specification. Both models indicate significant economies of scale and negative annul rates of growth in technical change and in total factor productivity