Financial Deregulation and Profit Efficiency: A Non-parametric Analysis of Indian Banks

Saibal Ghosh

MPRA Paper from University Library of Munich, Germany

Abstract: The paper investigates the performance of Indian commercial banking sector during the post reform period 1992-2004. The results indicate high levels of efficiency in costs and lower levels in profits, reflecting the importance of inefficiencies on the revenue side of banking activity. The decomposition of profit efficiency shows that a large portion of outlay lost is due to allocative inefficiency. The proximate determinants of profit efficiency appears to suggest that big state-owned banks performed reasonably well and are more likely to operate at higher levels of profit efficiency. A close relationship is observed between efficiency and soundness as determined by bank’s capital adequacy ratio. The empirical results also show that the profit efficient banks are those that have, on an average, less non-performing loans.

Keywords: Indian Banks; Deregulation; Profit efficiency; DEA model (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2009-11
New Economics Papers: this item is included in nep-ban, nep-cwa, nep-eff and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (48)

Published in Journal of Economics and Business 6.61(2009): pp. 509-528

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:24292

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