Deregulation and productivity growth: a study of Indian commercial banking
AbstractThis paper examines the impact of regulatory reform on the performance of Indian commercial banks. Using a balanced panel data set covering from the beginning of the deregulation period (1992) to the most recent years (2004) and employing a DEA-based Malmquist index of total factor productivity change, this paper attempts to quantify the magnitude of total factor productivity change and identify its main sources. We also explore whether deregulation has had a different impact on the performance of public, private and foreign banks and whether it affected the risk-taking behaviour of market participants. The empirical results seem to indicate that, after an initial adjustment phase, the Indian banking industry experienced sustained productivity growth, driven mainly by technological progress. Banks’ ownership structure seems to have an impact on bank efficiency but does not appear to have an influence on total factor productivity change. Although ownership per se does not seem to matter as much as increased competition, during the deregulation process foreign banks appear to have acted as technological innovators, thereby increasing even further the competitive pressure in the Indian banking market. Finally, our results also indicate an increase in risk-taking behaviour along with the whole deregulation process.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Henley Business School, Reading University in its series Economic Analysis Research Group Working Papers with number earg-wp2006-07.
Length: 37 pages
Date of creation: 2006
Date of revision:
Contact details of provider:
Postal: PO Box 218, Whiteknights, Reading, Berks, RG6 6AA
Phone: +44 (0) 118 378 8226
Fax: +44 (0) 118 975 0236
Web page: http://www.henley.reading.ac.uk/
More information through EDIRC
Deregulation; Indian banking; Productivity Change; Malmquist Index.;
Other versions of this item:
- Tianshu Zhao & Barbara Casu & Alessandra Ferrari, 2006. "Deregulation and productivity growth: a study of Indian commercial banking," Economics & Management Discussion Papers em-dp2006-38, Henley Business School, Reading University.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Zhao, Tianshu & Casu, Barbara & Ferrari, Alessandra, 2010. "The impact of regulatory reforms on cost structure, ownership and competition in Indian banking," Journal of Banking & Finance, Elsevier, vol. 34(1), pages 246-254, January.
- Sunil Kumar, 2013. "Banking reforms and the evolution of cost efficiency in Indian public sector banks," Economic Change and Restructuring, Springer, vol. 46(2), pages 143-182, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ed Quick).
If references are entirely missing, you can add them using this form.