Banking and Economic Activity Performance: An Empriical Study at the Country Level

Abstract

This paper examines the contribution of the banking sector to overall economic activity for a sample of 15 OECD countries during an 18-year period. Resorting to a recently defined global Malmquist index, we detect productivity growth in both cases and study the influence of its two components, efficiency change and technical change. We further analyze the relationship between each of the two banking productivity components and economic productivity.