Banking Reforms and Efficiency in India: Evidence from Data Envelopment Analysis and Tobit Regression Analysis

Abdul Hannan, Anand Kumar and Imran Alam
Additional contact information
Abdul Hannan: P.G. Department of Economics, Magadh University, Bodhgaya, India
Anand Kumar: P.G. Department of Economics, Magadh University, Bodhgaya, India
Imran Alam: P.G. Department of Economics, Magadh University, Bodhgaya, India

Economics and Applied Informatics, 2025, issue 2, 34-45

Abstract: This study examines Indian commercial banks' performance over the 1991–2022 reform period using Data Envelopment Analysis (DEA). The first stage of the two-stage procedure calculates efficiency scores, and the second stage uses Tobit regression to find the factors that affect efficiency. The data show that efficiency went up a lot following the global financial crisis, but it went down during the recovery from COVID-19. Public Sector Banks (PSBs) were always more efficient than private and foreign banks. This was because they were bigger, got help from the government, and reached more people. The Tobit model shows that total assets and return on assets had a big beneficial effect on efficiency. On the other hand, the capital adequacy ratio and non-performing assets were not statistically significant. The results show that Indian banks have adapted to liberalisation and new technology, yet there are still big problems since they aren't using their resources enough. The study shows that to close the gap between actual and prospective performance, businesses need to improve their operational methods, come up with new ideas, and manage their credit better, especially when the economy and regulations change.

Keywords: Bank Efficiency; Data Envelopment Analysis; Public Sector Banks; Tobit Regression (search for similar items in EconPapers)
Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://eia.feaa.ugal.ro/images/eia/2025_2/Hannan_et_al.pdf (application/pdf)

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:ddj:fseeai:y:2025:i:2:p:34-45

DOI: 10.35219/eai15840409508

Access Statistics for this article

More articles in Economics and Applied Informatics from "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration Contact information at EDIRC.
Bibliographic data for series maintained by Gianina Mihai ().