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Efficiency And Productivity Growth In Indian Banking

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  • S. S. RAJAN

    (Sri Sathya Sai Institute of Higher Learning,Prasanthinilayam Campus,Anantapur District, (A.P.))

  • K. L. N. REDDY

    (Sri Sathya Sai Institute of Higher Learning,Prasanthinilayam Campus,Anantapur District, (A.P.))

  • V. N. PANDIT

    (Sri Sathya Sai Institute of Higher Learning,Prasanthinilayam Campus,Anantapur District, (A.P.))

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    Abstract

    This paper attempts to examine technical efficiency and productivity performance of Indian scheduled commercial banks, for the period 1979-2008. We model a multiple output/multiple input technology production frontier using semiparametric estimation methods. The endogenity of multiple outputs is addressed by semi parametric estimates in part by introducing multivariate kernel estimators for the joint distribution of the multiple outputs and correlated random effects. Output is measured as the rupee value of total loans and total investments at the end of the year. The estimates provide robust inferences of the productivity and efficiency gains due to economic reforms.

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    Bibliographic Info

    Paper provided by Centre for Development Economics, Delhi School of Economics in its series Working papers with number 199.

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    Length: 24 pages
    Date of creation: Jul 2011
    Date of revision:
    Handle: RePEc:cde:cdewps:199

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    Related research

    Keywords: Banking; Frontier efficiency; Productivity;

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    1. Abhiman Das & K. R. Sanmugam, 2004. "Efficiency of Indian commercial banks during the reform period," Industrial Organization 0410005, EconWPA.
    2. Abhiman Das & Ashok Nag & Subhash Ray, 2004. "Liberalization, Ownership, and Efficiency in Indian Banking: A Nonparametric Approach," Working papers 2004-29, University of Connecticut, Department of Economics.
    3. Bhattacharyya, Arunava & Lovell, C. A. K. & Sahay, Pankaj, 1997. "The impact of liberalization on the productive efficiency of Indian commercial banks," European Journal of Operational Research, Elsevier, vol. 98(2), pages 332-345, April.
    4. Sickles, Robin C., 2005. "Panel estimators and the identification of firm-specific efficiency levels in parametric, semiparametric and nonparametric settings," Journal of Econometrics, Elsevier, vol. 126(2), pages 305-334, June.
    5. Sealey, Calvin W, Jr & Lindley, James T, 1977. "Inputs, Outputs, and a Theory of Production and Cost at Depository Financial Institutions," Journal of Finance, American Finance Association, vol. 32(4), pages 1251-66, September.
    6. Park, B.U. & Sickles, R.C. & Simar, L., 2000. "Semiparametric Efficient Estimation of AR(1) Panel Data Models," Papers 0020, Catholique de Louvain - Institut de statistique.
    7. Hancock, Diana, 1985. "The Financial Firm: Production with Monetary and Nonmonetary Goods," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 859-80, October.
    8. Berger, Allen N. & Hanweck, Gerald A. & Humphrey, David B., 1987. "Competitive viability in banking : Scale, scope, and product mix economies," Journal of Monetary Economics, Elsevier, vol. 20(3), pages 501-520, December.
    9. Pitt, Mark M. & Lee, Lung-Fei, 1981. "The measurement and sources of technical inefficiency in the Indonesian weaving industry," Journal of Development Economics, Elsevier, vol. 9(1), pages 43-64, August.
    10. George J. Benston & Gerald Hanweck & David B. Humphrey, 1981. "Scale economies in banking: a restructuring and reassessment," Research Papers in Banking and Financial Economics 53, Board of Governors of the Federal Reserve System (U.S.).
    11. Kumbhakar, Subal C & Sarkar, Subrata, 2003. " Deregulation, Ownership, and Productivity Growth in the Banking Industry: Evidence from India," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(3), pages 403-24, June.
    12. Schmidt, Peter & Sickles, Robin C, 1984. "Production Frontiers and Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(4), pages 367-74, October.
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