TOTAL FACTOR PRODUCTIVITY GROWTH IN SINGAPORE'S FINANCIAL SECTOR

Abstract

Previous studies on the total factor productivity on Singapore, either on economy level or sectoral level, have consistently revealed low rates of growth. Those studies that focused on sectoral observations are mainly on the manufacturing sector and not much work has been done about the service sector, in particular, the financial service sector. Though there has been an exploratory study done about the sources of growth of the service sector, the empirical results are not significant. Hence, the question lies with whether there is a difference between the financial sector as compared to the overall service sector, given that the financial sector faces international competition and should be expected to do better in terms of efficiency and productivity. In this thesis, we estimate the Total Factor Productivity (TFP) growth in the financial sector. The results of our study suggest that the TFP growth is significant in the financial sector.