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Efficiency and productivity analysis of Indian banking industry using Hicks-Moorsteen approach

Author

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  • Supran Kumar Sharma
  • Raina Dalip

Abstract

Purpose - – The purpose of this paper is to attempt to measure the performance of the Indian banking sector in terms of efficiency and productivity levels and their determinants during the post-reform period. Design/methodology/approach - – The present study is a novel attempt as it has used pooled data for a duration of 15 years (i.e. 1997/1998-2010/2011) from 59 selected banks for estimating the Hicks-Moorsteen (HM) total factor productivity (TFP) index. Findings - – Poor technical efficiency has experienced with scale efficiency change exerting dominant factors; whereas relatively better productivity growth has been experienced by the banks with major contributions from technical change components. The study found relatively underestimated efficiency and productivity levels by traditional data envelopment analysis-based Malmquist index. Additionally, the study brings into account the results for external and environmental determining factors contributing to the TFP growth. Originality/value - – Using HMTFP indices has helped to eliminate certain drawbacks of data envelopment and provided the more elaborative decomposition of productivity growth along with their components so as to have lucid and multidimensional insights about the performance of the Indian banking industry after the initiation of financial reforms.

Suggested Citation

  • Supran Kumar Sharma & Raina Dalip, 2014. "Efficiency and productivity analysis of Indian banking industry using Hicks-Moorsteen approach," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 63(1), pages 57-84, January.
    • Handle: RePEc:eme:ijppmp:v:63:y:2014:i:1:p:57-84
    DOI: 10.1108/IJPPM-09-2012-0096
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    Citations

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    Cited by:

    1. K. Hafsal & Anandarao Suvvari & S. Raja Sethu Durai, 2020. "Efficiency of Indian banks with non-performing assets: evidence from two-stage network DEA," Future Business Journal, Springer, vol. 6(1), pages 1-9, December.
    2. Neves Bezerra de Melo, Felipe Luiz & Sampaio, Raquel Menezes Bezerra & Sampaio, Luciano Menezes Bezerra, 2018. "Efficiency, productivity gains, and the size of Brazilian supermarkets," International Journal of Production Economics, Elsevier, vol. 197(C), pages 99-111.
    3. Mohammadian, Isaac & Jahangoshai Rezaee, Mustafa, 2020. "A new decomposition and interpretation of Hicks-Moorsteen productivity index for analysis of Stock Exchange companies: Case study on pharmaceutical industry," Socio-Economic Planning Sciences, Elsevier, vol. 69(C).

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