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Performance of Indian commercial banks (1995-2002): an application of data envelopment analysis and Malmquist productivity index

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Author Info
Don U.A. Galagedera (Monash University)
Piyadasa Edirisuriya (Monash University)

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Abstract

This paper investigates efficiency using data envelopment analysis (DEA) and productivity growth using Malmquist index in a sample of Indian commercial banks over the period 1995-2002. Using total deposits and operating expenses as input and loans and other earning assets as output in the DEA analysis we observe no significant growth in productivity during the sampled period. The rate of increase in technical efficiency though small is likely to be due to scale efficiency compared to managerial efficiency. In general, smaller banks are less efficient and highly DEA-efficient banks have a high equity to assets and high return to average equity ratios. There has been no growth in productivity in private sector banks where as the public sector banks appears to demonstrate a modest positive change through 1995-2002. Technological change in the public sector banks reveals a growth while the private sector banks experienced a negative growth of almost the same magnitude.

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Paper provided by EconWPA in its series Finance with number 0408006.

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Length: 31 pages
Date of creation: 17 Aug 2004
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Handle: RePEc:wpa:wuwpfi:0408006

Note: Type of Document - pdf; pages: 31
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Web page: http://129.3.20.41

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Keywords: Indian banks productivity change DEA Malmquist index

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Find related papers by JEL classification:
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages

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