Efficiency of Financial Holding and Non-financial Holding Bank in Taiwan: An Application of Meta-Frontier Malmquist Productivity Gap Index

Abstract

This paper applies the Meta-Frontier Malmquist Productivity Gap Index to analyze the performances and productivity index of banks in Taiwan, for the driven that taking the heterogeneity nature into consideration is quite crucial in calculating the efficiency of banks. In our study, a few conclusions are made: the Taiwan’s banks have 0.16% to improve to reach the efficient condition for 2013 to 2017; financial holding banks for whole period own better TEj value than non-financial holding banks; the group frontier converge to meta frontier at an average speed of 0.075% per year, and its convergence mainly comes from the technical efficient gap change; ΔTEGj of financial holding banks and non-financial holding banks are both showing convergence for whole period; financial holding banks’s technical gap change is smaller than 1 meaning sluggish or regress, while the non-financial enjoys an improvement for whole period.