Measuring technical efficiency of banks vis-à-vis demonetization: an empirical analysis of Indian banking sector using CAMELS framework

Shakeb Akhtar (), Mahfooz Alam (), Aslam Khan () and Mohd Shamshad ()
Additional contact information
Shakeb Akhtar: Galgotias University
Mahfooz Alam: University of the People
Aslam Khan: Aligarh Muslim University
Mohd Shamshad: Galgotias University

Quality & Quantity: International Journal of Methodology, 2023, vol. 57, issue 2, No 36, 1739-1761

Abstract: Abstract The present paper examines the banking industry’s technical efficiency for the pre-and post-demonetization period, using the case of India. A two-stage analysis has been employed based on balanced panel data over the period 2015–2018 for 56 commercial banks in the Indian context. First, Data Envelopment Analysis (DEA) measure is used to evaluate the technical efficiency of the sampled banks. In the second stage, Tobit regression is applied to regress all bank-specific factors on the technical efficiency of Indian banks, using the CAMELS framework. The findings of DEA analysis suggests that the Indian banking industry, in general, was on a constant efficiency trend during the period of study. However, individual bank-level analysis delineates that the public banks report the highest overall average efficiency score followed by foreign banks and private banks, respectively. The results of Tobit regression suggest the superior performance of the Indian banks in the post-demonetization period. This study provides an insight to the promoters, regulators, policymakers and bankers to assess the viability of the Indian banking sector. It implies that the consolidation of inefficient banks will bring positive synergies and might provide a cushion to an emerging economy like India.

Keywords: Commercial banks; Data envelopment analysis; Technical efficiency; Tobit regression; Demonetization (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s11135-022-01431-8 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:qualqt:v:57:y:2023:i:2:d:10.1007_s11135-022-01431-8

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/11135

DOI: 10.1007/s11135-022-01431-8

Access Statistics for this article

Quality & Quantity: International Journal of Methodology is currently edited by Vittorio Capecchi

More articles in Quality & Quantity: International Journal of Methodology from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().