Indian bank efficiency and productivity changes with undesirable outputs:A disaggregated approach

Hidemichi Fujii, Shunsuke Managi and Roman Matousek

MPRA Paper from University Library of Munich, Germany

Abstract: The objective of this study is to examine technical efficiency and productivity growth in the Indian banking sector over the period from 2004 to 2011. We apply an innovative methodological approach introduced by Chen et al. (2011) and Barros et al. (2012), who use a weighted Russell directional distance model (WRDDM) to measure technical inefficiency. We further modify and extend that model to measure TFP change with NPLs. We find that the inefficiency levels are significantly different among the three ownership structure of banks in India. Foreign banks have strong market competitiveness in India and they pull the production frontier in a more efficient direction. SPBs and domestic private banks show considerably higher inefficiency. We conclude that the restructuring policy applied in the late 1990s and early 2000s by the Indian government has not had a long-lasting effect.

Keywords: DEA; Efficiency; Bank; India; Non-performing loan (search for similar items in EconPapers)
JEL-codes: G21 O4 O47 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Indian bank efficiency and productivity changes with undesirable outputs: A disaggregated approach (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:92657

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