Analyzing Productivity of Labor and Capital of Commercial Banks in Jordan: An Analytical Study for the Period (1983-2012)

Hussam A Daoud, Suad M AlTayeb, Mohammad M AlThneebat

Abstract


The subject of productivity is one of the subjects that have received considerable attention in both developed and developing countries, which is an important indicator for economic growth and the well-being of peoples.
The objective of this study is to analyse labor and capital productivity, along with total factor productivity for the period (1983-2012). The study used an econometric model of the Cobb Douglas production function. It measured elasticities of the factors of production (labor and capital) in the banking sector in Jordan. It also tested the stability of Economies of scale in this sector. To satisfy its objectives, the study measured the elastisities of substitution as well as the marginal productivity.
The study concludes that: the elasticities of the factors of production are high in the banking sector in general, banks operating in Jordan are characterized by labor-intensive and showed that banks were working under increasing returns to scale. The study aslo showed that commercial banks in Jordan are characterized by constant elasticity of substitution. There is convergence between the marginal productivity of labor and capital of banks operating in Jordan.
The study sugested focussing on investment in human capital because of its importance and vital role in driving the growth of output of Commercial Banks in Jordan.

Keywords


Labor Productivity, Capital Productivity, Total Factor Productivity, Commercial Banks.

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