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Cost efficiency in an Indian bank branch network: A centralized resource allocation model

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  • Ray, Subhash

Abstract

In the present study we evaluate the overall cost efficiency of a network of branches of a single large public sector bank in India within the city of Calcutta using the data for the year 2012. Our objective is to determine the optimal number of branches within a postal district that could provide the observed amounts of banking services to the customers in that area at the minimum operating cost. Our DEA results show that there is an evidence of ‘over-branching’ and for the entire network reducing the total number of branches would be more cost efficient. However, there are numerous instances, where increasing the number of branches within a market area would be optimal.

Suggested Citation

  • Ray, Subhash, 2016. "Cost efficiency in an Indian bank branch network: A centralized resource allocation model," Omega, Elsevier, vol. 65(C), pages 69-81.
  • Handle: RePEc:eee:jomega:v:65:y:2016:i:c:p:69-81
    DOI: 10.1016/j.omega.2015.12.009
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    References listed on IDEAS

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    Cited by:

    1. repec:spr:opsear:v:55:y:2018:i:3:d:10.1007_s12597-018-0332-2 is not listed on IDEAS
    2. Subhash C. Ray & Abhiman Das & Kankana Mukherjee, 2018. "Measures of Labor Use Efficiency from a Cost-Based Dual Representation of the Technology: A Study of Indian Bank Branches," Working papers 2018-17, University of Connecticut, Department of Economics.
    3. repec:eee:jomega:v:77:y:2018:i:c:p:180-188 is not listed on IDEAS
    4. repec:spr:cejnor:v:26:y:2018:i:4:d:10.1007_s10100-018-0563-6 is not listed on IDEAS
    5. repec:eee:ejores:v:261:y:2017:i:3:p:1170-1188 is not listed on IDEAS
    6. Subhash C. Ray & Abhiman Das & Kankana Mukherjee, 2017. "Labor-Cost Efficiency with Indivisible Outputs and Inputs: A Study of Indian Bank Branches," Working papers 2017-04, University of Connecticut, Department of Economics.

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    Keywords

    Cost models; Efficiency; DEA; Banking;

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