Malmquist Indices of Productivity Growth during the Deregulation of Norwegian Banking, 1980-89

Productivity growth during the deregulation of the Norwegian banking industry is studied within the framework of data envelopment analysis, which explicitly allows for multiple outputs. Introducing Malmquist indices for productivity growth, total growth can be decomposed into frontier growth and change in each bank's distance to the frontier. Both the total growth index and its components can be consistently chained over time. The authors find productivity regress at the average bank prior to the deregulation, but rapid growth when deregulation took place. Deregulation also led to less dispersion of productivity levels within the industry. Copyright 1992 by The editors of the Scandinavian Journal of Economics.