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

journal contribution
posted on 2023-06-08, 16:44 authored by Hidemichi Fujii, Shunsuke Managi, Roman Matousek
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 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 position 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.

History

Publication status

  • Published

Journal

Journal of Banking and Finance

ISSN

0378-4266

Publisher

Elsevier

Volume

38

Page range

41-50

Department affiliated with

  • Business and Management Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2014-02-20

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