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Fund-Based Activity of Indian Commercial Banks: A Malmquist Approach

Author

Listed:
  • Ram Pratap Sinha

    (Department of Economics, A.B.N. Seal (Govt.) College, Coochbehar - 736101, India.)

  • Biswajit Chatterjee

    (Faculty of Arts, Jadavpur University, Kolkata - 700032, India.)

Abstract

In view of the changed scenario in the Indian banking sector during the reform period, the present paper tries to make a comparison of fund based operating performance and total factor productivity growth of select (30) Indian commercial banks (20 public sector, eight private sector and two foreign commercial banks) for the five year period 2000-01 to 2004-05 using Data Envelopment Analysis and Malmquist total factor productivity index. The results obtained from the exercise indicate substantial fluctuations in mean technical efficiency scores for the observed years. The mean technical efficiency of the in-sample private and foreign banks is somewhat higher than the in-sample public sector banks. Further, most of the in-sample banks exhibit decreasing returns to scale. In so far as total factor productivity growth is concerned, the in-sample public sector commercial banks exhibited relatively higher Malmquist TFP Index than the in-sample private sector banks. Decomposition of the total factor productivity growth rate into technical efficiency change and technical change components reveals that across the groups the commercial banks exhibit rising technical efficiency but negative technical change.

Suggested Citation

  • Ram Pratap Sinha & Biswajit Chatterjee, 2008. "Fund-Based Activity of Indian Commercial Banks: A Malmquist Approach," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 43(1), pages 83-102, July.
    • Handle: RePEc:dse:indecr:v:43:y:2008:i:1:p:83-102
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    Citations

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    Cited by:

    1. Tulika Bhattacharya & Meenakshi Rajeev & Indrajit Bairagya, 2018. "Are high-linked sectors more productive in India? An analysis under an input–output framework," Indian Economic Review, Springer, vol. 53(1), pages 333-367, December.
    2. Hari Prasad Pathak, PhD, 2019. "Malmquist Productivity Index Approach in Assessing Performance of Commercial Banks: Evidence from Nepal," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 31(2), pages 1-25, October.

    More about this item

    Keywords

    Banking; Fund Based Activity; DEA; Total Factor Productivity;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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