Environmental Performance and Bank Productivity: A Cost-Efficiency Decomposition Approach Using VRS Cost Malmquist Analysis
Kai-Chao Yao, Zhen-Yu Liu, Sumei Chiang, Feng-Yu Lin, Fan-Yun Pai, Shao-Hsun Chang, Hsiu-Wen Hsueh, Ming-Hsiang HuangThis study examines environmental performance and bank cost productivity using a VRS Cost Malmquist decomposition framework. Using annual data from 18 listed Taiwanese banks (2017–2023, 18 banks × 6 years = 108 bank-transition observations), the framework integrates input and output quantities with input prices in a cost-based productivity system. CMPI is decomposed into pure technical efficiency, technological change, allocative efficiency, price effects, and cost scale efficiency, thereby revealing channels of cost productivity change. The reported pooled OLS estimates suggest negative associations between environmental performance and CMPI, pure technical efficiency change, technological change, and allocative efficiency change. These associations remain exploratory because serial-dependence and finite-sample inference concerns remain unresolved. The decomposition provides a more detailed description of productivity variation without establishing causal mechanisms.