In this working paper we examine variation in financial performance, both across organizational form and through time. Because variation in financial performance may be driven by variation in productivity, we also examine variation in productivity, again across organizational form and through time. The organizational forms we consider are Spanish commercial banks, savings banks and financial cooperatives,and the time period is 1993-2004.

We decompose multilateral variation in profit into price variation and quantity variation. We then decompose multilateral quantity variation into margin variation and productivity variation. Finally we decompose multilateral productivity variation into variation in technology, variation in cost efficiency and variation in scale. We find variation in financial performance across the three organizational forms, some of which is attributable to variation in productivity, although the nature of therelationship is sensitive to the financial performance indicator used.

We also find that deregulation and liberalization have acted to narrow performance gaps among organizational forms. However evidence that the mechanism through which convergence has occurred is increased competition is not compelling.