The Bank Efficiency through Off-Balance Sheet Items’ Window: A Malmquist Approach

Hariom Gurjar, Akhilesh Tripathi and Mahesh C. Joshi

Vision, 2021, vol. 25, issue 4, 448-459

Abstract: After financial reforms, banks in India adopted financial innovation to earn more profits through various off-balance sheet tools. To gauge the impact of these items on the efficiency of selected banks, we used the non-parametric Malmquist method. We calculated the efficiency with and without inclusion of these items. Technical and technological efficiency changes were calculated to make total factor productivity change index for 10 years (2008–2017). The results for the banks strengthen the dominant view in the current literature, removing off-balance sheet items led to a biased efficiency of these banks. The presence of these items increased the efficiency of the banks. Nonetheless, it also supported that increment in efficiency was more due to technological change. Despite the odd distribution of these items among these banks, they made a significant pie in the income of banks and overlooking them eroded the efficiency of the banks.

Keywords: Off-balance Sheet Items (OBSI); Efficiency; Efficiency Measurement; DEA; Malmquist Index; Indian Banks; Noninterest Income (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sae:vision:v:25:y:2021:i:4:p:448-459

DOI: 10.1177/0972262920914097

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