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Financial reforms and technical efficiency in Indian commercial banking: A generalized stochastic frontier analysis

  • Bhattacharyya, Aditi
  • Pal, Sudeshna
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    In this study we estimate technical efficiency of Indian commercial banks from 1989 to 2009, using a multiple-output generalized stochastic production frontier and analyze the effects of financial reforms on estimated efficiency. The generalized method estimates technical efficiency in the presence of multiple outputs, filling a gap in the existing literature. Our results show that Indian commercial banks were operating with 64% efficiency on average during the sample period. The initial phase of reform had a positive impact on while the later phase adversely affected technical efficiency of banks. Public sector banks show higher efficiency levels compared to private and foreign banks.

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    Article provided by Elsevier in its journal Review of Financial Economics.

    Volume (Year): 22 (2013)
    Issue (Month): 3 ()
    Pages: 109-117

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    Handle: RePEc:eee:revfin:v:22:y:2013:i:3:p:109-117
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