Indian bank efficiency and productivity changes with undesirable outputs: A disaggregated approach

Hidemichi Fujii, Shunsuke Managi and Roman Matousek

Journal of Banking & Finance, 2014, vol. 38, issue C, 41-50

Abstract: The objective of this study is to examine technical efficiency and productivity growth in the Indian banking sector over the period from 2004 to 2011. We apply an innovative methodological approach introduced by Chen et al. (2011) and Barros et al. (2012), who use a weighted Russell directional distance model to measure technical inefficiency. We further modify and extend that model to measure TFP change with NPLs. We find that the inefficiency levels are significantly different among the three ownership structure of banks in India. Foreign banks have strong market position in India and they pull the production frontier in a more efficient direction. SPBs and domestic private banks show considerably higher inefficiency. We conclude that the restructuring policy applied in the late 1990s and early 2000s by the Indian government has not had a long-lasting effect.

Keywords: DEA; Efficiency; Bank; India; Non-performing loan (search for similar items in EconPapers)
JEL-codes: C14 G21 P42 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (113)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378426613003907
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Indian bank efficiency and productivity changes with undesirable outputs:A disaggregated approach (2013)
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:eee:jbfina:v:38:y:2014:i:c:p:41-50

DOI: 10.1016/j.jbankfin.2013.09.022

Access Statistics for this article

Journal of Banking & Finance is currently edited by Ike Mathur

More articles in Journal of Banking & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().