Are some Indian banks too large? An examination of size efficiency in Indian banking

Subhash Ray

Journal of Productivity Analysis, 2007, vol. 27, issue 1, 56 pages

Abstract: In this paper we use data from the years 1997–2003 to evaluate the size efficiency, as distinct from scale efficiency, of Indian banks. Following Maindiratta [Maindiratta A (1990) J Econ 46:39–56] we consider a bank to be “too large” if breaking it up into a number of smaller units would result in a larger output bundle than what could be produced from the same input by a single bank. When this is the case, the bank is not size efficient. Our analysis shows that many of the banks are, indeed, too large in various years. We also find that often a bank is operating in the region of diminishing returns to scale but is not a candidate for break up. Copyright Springer Science+Business Media, LLC 2007

Keywords: Most productive scale size; Scale efficiency; L23; G21 (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1007/s11123-006-0022-6

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