Productivity analysis in the banking system and its sociological explanation (The relationship between short-term and long-term causality between labor force, capital adequacy and total factor productivity in banks)

Document Type : Original Article

Authors

1 Department of Economics, Faculty of Economics and Management, Islamic Azad University, Research Sciences Branch, Tehran, Iran

2 Department of Economics and management, Islamic Azad University, Science and Research Branch, Tehran, Iran

3 Department of Economics and management, Science and Research Branch, Islamic Azad University, Tehran, Iran

Abstract

Improving the productivity of financial markets plays an important role in the economies of countries. Given the bank-oriented financing system of most countries, it is important to know the ways to measure and increase the level of productivity in banks. Accordingly, the purpose of this study is investigating the short-term and long-term causality between capital adequacy, labor and Total Factor Productivity (TFP) in a set of 10 banks listed on the Tehran Stock Exchange in 2010-2017. So, Dynamic Ordinary Least Squares (DOLS) method, Vector Error Correction Model (VECM) and Wald test have been used.So, Dynamic Ordinary Least Squares (DOLS) method, Vector Error Correction Model (VECM) and Wald test have been used. According to the results, in the short run, a one-way Causality from capital adequacy to TFP is obtained. In the long run, the two-way relationships between labor and capital adequacy variables with TFP are positive. In this study, the error correction term, which indicates the speed of short-term adjustment to long-term equilibrium, has been evaluated.

Keywords

Political Sociology of Iran
Volume 5, Issue 8
October 2022
Pages 395-411

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