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Productivity growth in Indian banking: Who did the gains accrue to?

Author

Listed:
  • Rajeswari Sengupta

    (Indira Gandhi Institute of Development Research)

  • Harsh Vardhan

    (S.P. Jain Institute of Management and Research)

Abstract

In this paper we analyse the beneficiaries of productivity gains in the Indian banking sector during the period from 1992 to 2019. We document the relative efficiency of different groups of banks by ownership. We find that the Indian banking sector, particularly the public sector banks experienced steady productivity growth from the mid 1990s till about 2010. We conduct a detailed descriptive analysis to examine the various stakeholders that the productivity gains have accrued to, over the years and across bank groups. We conclude that most of the gains may have accrued to the shareholders which for the public sector banks would mean the government. These gains presumably helped reduce the burden on the government of capitalising the public sector banks, especially during the 1997-2002 period of sharp rise in non performing assets.

Suggested Citation

  • Rajeswari Sengupta & Harsh Vardhan, 2020. "Productivity growth in Indian banking: Who did the gains accrue to?," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2020-024, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2020-024
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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2020-024.pdf
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    More about this item

    Keywords

    Banking sector; Bank productivity; Beneficiaries; Efficiency gains;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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