Distribution of cost and profit efficiency: Evidence from Indian banking
AbstractThis paper uses the nonparametric DEA methodology to estimate cost and profit efficiency of Indian banks during the post-reform period. The results show considerable variation in average levels of profit efficiency across various ownership categories of banks. In general, state owned banks are found to be more efficient than their private counter parts. Further, efficiency tends to be low among the small banks (assets up to Rs. 50 billion), indicating that at the existing scale of operations, these banks are operating far below the efficient frontier. We also examine the distribution of efficiency using nonparametric kernel density estimates. The analysis reveals a rightward-shift of the efficiency distribution over the years. A major part of this shift comes from the state owned banks. Based on the conditional distribution, the study finds strong evidence of ownership explaining the efficiency differential of banks. Additionally, bank size and product-mix are also found to be important, although to a lesser extent.
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Bibliographic InfoArticle provided by Elsevier in its journal European Journal of Operational Research.
Volume (Year): 201 (2010)
Issue (Month): 1 (February)
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Web page: http://www.elsevier.com/locate/eor
Bank Data envelopment analysis Efficiency Distribution;
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- Patricia Tecles & Benjamin M. Tabak, 2010.
"Determinants of Bank Efficiency: the case of Brazil,"
Working Papers Series
210, Central Bank of Brazil, Research Department.
- Tecles, Patricia Langsch & Tabak, Benjamin M., 2010. "Determinants of bank efficiency: The case of Brazil," European Journal of Operational Research, Elsevier, vol. 207(3), pages 1587-1598, December.
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