Efficiency of Indian Private Commercial Banks: Evaluation and Explanation

Ram Pratap Sinha and K. Shanmugan

Chapter 10 in Handbook of Financial Services Performance:Analytical and Empirical Perspectives, 2026, pp 203-219 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The present study evaluates efficiency by adopting the directional distance function approach and seeks to explain the efficiency estimates for the 18 private sector commercial firms that continuously operated for the period 2014–2015 to 2023–2024. The result of the first stage is that while mean efficiency remained fairly stable during the decade under observation, new private sector banks have mostly performed better than the old private sector banks for the period under observation. The second stage analysis uses both static and dynamic models, and the outcomes indicate that efficiency is positively related to credit–deposit ratio and measures of profitability (return on asset and profit per employee) but negatively linked to capital-to-risk-weighted asset ratio and bank size. In the dynamic model, the coefficients of one-period lagged efficiency estimates are also highly significant.

Keywords: Financial Services; Performance Measurement Financial Services; Performance Evaluation Financial Services; Banking Efficiency; Insurance Performance; Fintech Impact; AI In Financial Services; Machine Learning In Financial Services; Big Data Analytics Finance; Digital Finance; Financial Inclusion India; Digital Public Infrastructure India; Data Envelopment Analysis Finance; DEA In Financial Services; Super-Efficiency DEA; Nonconvex Frontier Analysis; Inverse DEA Models; Banking Production Models; Input-Output Analysis Finance; Econometric Modeling Financial Services; Technical Efficiency Banking; ARIMA Cryptocurrency Forecasting; LSTM Cryptocurrency Prediction; Blockchain Price Prediction; Cryptocurrency Market Analysis; Cryptocurrency Sensitivity Asia; Fintech In Emerging Markets; Policy Perspective Financial Inclusion; Political Stability Bank Risk India; Government Effectiveness Bank Risk; Asset Allocation ETFs; Intraday Volatility ETFs; Litigation Risk Banking; Corporate Governance Banks; Banking Theory Genres; Scholarly Performance Frameworks; Bibliographic Trends Financial Services; Empirical Finance Research; Case Studies Banking; Econometric Techniques Finance; Technology Adoption Financial Services; Performance Analytics Finance; Frontiers Financial Services Research; Handbook Financial Services Performance (search for similar items in EconPapers)
JEL-codes: C67 G21 G22 G23 G28 (search for similar items in EconPapers)
Date: 2026
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