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Loan Portfolio Management and Bank Efficiency: A Comparative Analysis of Public, Old Private, and New Private Sector Banks in India

Author

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  • Santhosh Kumar Venugopal

    (Brest Business School, 2 Av. de Provence, 29200 Brest, France)

Abstract

This comparative study analyzed the impact of loan portfolio composition on the efficiency of different types of banks in India—public sector, old private, and new private banks—in the period between 2013 and 2022. Efficiency was evaluated using data envelopment analysis (DEA). The study considered four loan variables—term lending, working capital, priority sector lending, and secured lending in proportion to the overall loans—as independent factors against the efficiency score as the dependent variable, using a random-effects generalized least squares (GLS) regression framework. The results indicate that there were no significant effects on the efficiency of old private banks, except for working capital, which had a marginally negative impact on bank efficiency. Working capital, priority sector lending, and term lending have been found to significantly impact the efficiency of new private banks. Only term and working capital loans significantly affected the efficiency of public sector banks.

Suggested Citation

  • Santhosh Kumar Venugopal, 2024. "Loan Portfolio Management and Bank Efficiency: A Comparative Analysis of Public, Old Private, and New Private Sector Banks in India," Economies, MDPI, vol. 12(4), pages 1-17, March.
    • Handle: RePEc:gam:jecomi:v:12:y:2024:i:4:p:81-:d:1367741
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    References listed on IDEAS

    as
    1. Muneesh Kumar & Neetika Batra & Florent Deisting, 2016. "Determinants Of Priority Sector Lending: Evidence From Bank Lending Patterns In India," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 10(2), pages 55-80.
    2. Sunil Kumar & Rachita Gulati, 2014. "Deregulation and Efficiency of Indian Banks," India Studies in Business and Economics, Springer, edition 127, number 978-81-322-1545-5, December.
    3. Ewa Cichowicz & Ewa Rollnik-Sadowska & Monika Dędys & Maria Ekes, 2021. "The DEA Method and Its Application Possibilities for Measuring Efficiency in the Public Sector—The Case of Local Public Employment Services," Economies, MDPI, vol. 9(2), pages 1-13, May.
    4. Sunil Kumar & Rachita Gulati, 2014. "Measurement of Bank Efficiency: Analytical Methods," India Studies in Business and Economics, in: Deregulation and Efficiency of Indian Banks, edition 127, chapter 0, pages 49-117, Springer.
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    Cited by:

    1. David Aboagye Danquah & Kofi Osei Adu, 2025. "Effects of lending rates and financial development on loan portfolio in sub-Saharan Africa," Future Business Journal, Springer, vol. 11(1), pages 1-19, December.

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