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Technical Efficiency of Public Sector Banks in India: An Empirical Study

Nitashree Barman (), Dr. Kingshuk Adhikari () and Dr. Nikhil Bhusan Dey ()
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Nitashree Barman: Research Scholar, Department of Commerce, Assam University (A Central University), Silchar, India
Dr. Kingshuk Adhikari: Assistant Professor, Department of Commerce, Assam University (A Central University), Silchar, India
Dr. Nikhil Bhusan Dey: Professor, Department of Commerce, Assam University (A Central University), Silchar, India

Journal of Commerce and Trade, 2015, vol. 10, issue 1, 56-65

Abstract: The purpose of the present paper is to analyse the performance of public sector banks in India for the period 2002-03 to 2011-12 with the help of non-parametric frontier approach. The technical efficiency of twenty five (25) public sector banks has been computed using Data Envelopment Analysis (DEA) model and the same has been further decomposed into pure technical efficiency and scale efficiency. The study reveals that on an average, technical efficiency score of the banks has turned out to be 0.963 and majority of the banks have obtained efficiency score within the range of (0.982-0.999). The empirical findings of the study conclude that performance of the public sector banks in respect of optimum utilization of inputs for producing the given level of output has improved over the period. However, the major source of technical inefficiency of public sector banks in India is found to be managerial inabilities in converting inputs into outputs optimally rather than inappropriate size of operation.

Keywords: Technical Efficiency; Pure Technical Efficiency; Scale Efficiency; Data Envelopment Analysis (search for similar items in EconPapers)
JEL-codes: G21 G24 Z0 (search for similar items in EconPapers)
Date: 2015
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