Productivity Growth, Efficiency Change, & Technical Progress of a Corporate Sector in Bangladesh: A Malmquist Output Productivity Index Approach

Abstract

The purpose of this study is to estimate the Malmquist productivity change index for a corporate sector in Bangladesh. In addition to estimating the Malmquist productivity change index, the reasons of productivity change are also investigated. The study shows that productivity is increased by 1.3 percent per year over the period 2006-2012. This growth is due to increase in efficiency by 4.1 percent per year and decline in the catching up by 2.7 percent per year. A study of leverage ratios of the productivity growth and the productivity declined industry shows that there is a mismatch between the leverage ratios of the two groups. Moreover, a relationship study shows that the Malmquist productivity change index or its components and the traditional measures of the corporate performance present different aspects of corporate performance. The study suggests using the Malmquist productivity change index as a proxy of corporate performance when checking the effect of leverage on performance and effect of performance on leverage. Finally, the study ends with the suggestions for the managers for the productivity improvements.