Branching Efficiency in Indian Banking: An Analysis of a Demand-Constrained Network

Subhash Ray

No 2014-34, Working papers from University of Connecticut, Department of Economics

Abstract: In the present study we evaluate the overall cost efficiency of a network of branches of a single large public sector bank in India within the city of Calcutta using the data for the year 2012. Our objective is to determine the optimal number of branches within a postal district that could provide the observed amounts of banking services to the customers in that area at the minimum operating cost. Our DEA results show that there is an evidence of ‘over-branching’ and for the entire network reducing the total number of branches would be more cost efficient. However, there are numerous instances, where increasing the number of branches within a market area would be optimal.

Keywords: Network Efficiency; DEA; Banking (search for similar items in EconPapers)
JEL-codes: C61 G21 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2014-11
New Economics Papers: this item is included in nep-ban and nep-eff
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Citations: View citations in EconPapers (1)

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