Determinants of Cost Efficiency of Commercial Banks in India: DEA Evidence

Dalip Raina and Supran Kumar Sharma

The IUP Journal of Bank Management, 2013, vol. XII, issue 2, 17-30

Abstract: This paper examines the cost efficiency of Indian commercial banks using Data Envelopment Analysis (DEA) and specifically incorporating interest and non-interest income measures in the estimation. In consistent with the earlier findings, the results show that there is substantial inefficiency among the commercial banks in India over the period of the study (2005-06 to 2010-11). This result suggests that the observed cost inefficiency in the Indian banking industry is primarily due to the regulatory environment in which public sector banks are operating rather than the managerial problems in using the financial resources. The results further signify that the level of competitive practices and technology in the Indian banking industry during the post-reforms period served as a catalyst in improving the level of cost efficiency.

Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjbm:v:12:y:2013:i:2:p:17-30

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