Analysis of Technical Efficiency of Indian Banking Sector: An Application of Data Envelopment Analysis

Dipayan Roy
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Dipayan Roy: Indian Institute of Management, Indore, India

International Journal of Finance & Banking Studies, 2014, vol. 3, issue 1, 150-160

Abstract: The proactively evolved banking regulations in the Indian Banking sector under the authorative directive of the Reserve bank of India (RBI) has often brought about a change in the business strategy, capital structure and operations of the banks in the Indian banking sector. During theseevents of continuous change and adoption of Basel norms, we analyse the efficiency of the Indian banking sector with using Data Envelopment Analysis across three economic eras andacross thedifferent ownership structures. The determinants of efficiency are selected on the basis of intermediation approach. We also attempt to identify whether the inefficiency arises from managerial incompetence or improper size and resource allocation. From our analysis, we identify the main cause of inefficiency in the Indian Bankingsector to be arising out of improper size allocation.

Keywords: Efficiency; Basel norms; Data Envelopment Analysis; Intermediation Approach (search for similar items in EconPapers)
Date: 2014
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