Total Factor Productivity Change in Non-Bank Financial Institutions: Evidence From Malaysia Applying a Malmquist Productivity Index (MPI)

Applying a non-parametric Malmquist Productivity Index (MPI) method, this paper attempts to investigate productivity changes of Malaysian non-bank financial institutions during the post crisis period of 2000-2004. Our results suggest that: (1) Malaysian NBFIs have exhibit productivity regress of 2.3% and that the productivity regress during the period was largely attributed to Technological Change (-5.9%) rather than Technical Efficiency Change (+5.1%). (2) 60% of Malaysian NBFIs have exhibit productivity regress ranging from 1.3% to as high as 45.8% and (3) PTE has greater positive impact to Malaysian NBFIs Technical Efficiency, which congregates to earlier findings by Krishnasamy et al. (2004) on Malaysian banks.