Financial reforms and technical efficiency in Indian commercial banking: A generalized stochastic frontier analysis

Aditi Bhattacharyya and Sudeshna Pal

Review of Financial Economics, 2013, vol. 22, issue 3, 109-117

Abstract: In this study we estimate technical efficiency of Indian commercial banks from 1989 to 2009, using a multiple-output generalized stochastic production frontier and analyze the effects of financial reforms on estimated efficiency. The generalized method estimates technical efficiency in the presence of multiple outputs, filling a gap in the existing literature. Our results show that Indian commercial banks were operating with 64% efficiency on average during the sample period. The initial phase of reform had a positive impact on while the later phase adversely affected technical efficiency of banks. Public sector banks show higher efficiency levels compared to private and foreign banks.

Keywords: Technical efficiency; Generalized stochastic production frontier; Indian commercial banks; Financial reforms; Liberalization (search for similar items in EconPapers)
JEL-codes: D24 G21 G28 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (21)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:revfin:v:22:y:2013:i:3:p:109-117

DOI: 10.1016/j.rfe.2013.04.002

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