Indian bank efficiency and productivity changes with undesirable outputs: A disaggregated approach |
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Institution: | 1. School of Management, University of Science and Technology of China, Hefei, Anhui Province 230026, PR China;2. HeFei University of Technology, Hefei, Anhui Province 230026, PR China;1. Institute of Poyang Lake Eco-economics, Jiangxi University of Finance and Economics, Nanchang 330013, China;2. School of Economics, Jinan University, No. 601, West of Huangpu Avenue, Tianhe District, Guangzhou, Guangdong 510632, China |
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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 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. |
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Keywords: | DEA Efficiency Bank India Non-performing loan C14 G21 P42 |
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