Real Output of Bank Services: What Counts is What Banks Do, Not What They Own

We argue that models of banks as processors of information and transactions imply a quantity measure of bank output based on transaction counts instead of balances of loans and deposits. Compiling new and comparable real output measures for the USA and a range of European countries, we show that cou...

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Bibliographic Details
Published in:Economica (London) 2013-01, Vol.80 (317), p.96-117
Main Authors: Inklaar, Robert, Wang, J. Christina
Format: Article
Language:English
Subjects:
Bank assets
Bank loans
Bank operations
Bank reserves
Bank services
Banking
Banking services
Banks
Economic models
Europe
Financial risk
Financial transactions
Houses
Information
International comparisons
Loan rates
Loans
Mortgage loans
Output
Output rate
Price indices
Statistics
Studies
United States
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Summary:We argue that models of banks as processors of information and transactions imply a quantity measure of bank output based on transaction counts instead of balances of loans and deposits. Compiling new and comparable real output measures for the USA and a range of European countries, we show that counts-based output series exhibit substantially different growth patterns than balances-based output series. Since the US official statistics rely on counts while European statistics rely on balances, this implies that comparisons of bank output growth between Europe and the USA are biased.
ISSN:0013-0427
1468-0335
DOI:10.1111/j.1468-0335.2012.00942.x