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Efficiency of Public and Private Sector Banks in India

Author

Listed:
  • Sushma Vegesna

    (Quikjet Cargo Airlines Private Limited, India)

  • Mihir Dash

    (Alliance University, India)

Abstract

The Indian banking system is still dominated by the public sector banks, and the issues of performance and efficiency have emerged to be the touchstone for the success of such banks. There is a need to develop a comprehensive framework for measuring their efficiency in transforming their resources for better performance. Such performance benchmarking has become extremely relevant for their success. The current study focuses on the technical efficiency of banks in India using Data Envelopment Analysis (DEA), to identify critical factors affecting the efficiency of banks. The inputs taken include net worth, deposits, borrowings, operating expenses, and fixed assets, while the outputs taken are investments, advances, net interest income and non-interest income. The results of the study show that public sector banks were more efficient than the private sector ones, and that there was a trend decrease in the average level of efficiency. There were also some significant differences in terms of utilization/underutilization of inputs and under-production of outputs.

Suggested Citation

  • Sushma Vegesna & Mihir Dash, 2014. "Efficiency of Public and Private Sector Banks in India," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 3(3), pages 183-187.
  • Handle: RePEc:ods:journl:v:3:y:2014:i:3:p:183-187
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    File URL: http://www.jami.org.ua/Papers/JAMI_3_3_183-187.pdf
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    References listed on IDEAS

    as
    1. Abhiman Das & Ashok Nag & Subhash Ray, 2004. "Liberalization, Ownership, and Efficiency in Indian Banking: A Nonparametric Approach," Working papers 2004-29, University of Connecticut, Department of Economics.
    2. K. R. Shanmugam & A. Das, 2004. "Efficiency of Indian commercial banks during the reform period," Applied Financial Economics, Taylor & Francis Journals, vol. 14(9), pages 681-686.
    3. Anatoliy G. Goncharuk, 2013. "About The Influence Of High Gas Price On An Efficiency," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 2(1), pages 58-67.
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    Citations

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    Cited by:

    1. repec:ods:journl:v:7:y:2018:i:1:p:24-37 is not listed on IDEAS
    2. Saroj Upadhyay & Sudeshna Gupta, 2016. "Taking a Relook into the Decision Making Process in Indian Banking Sector with Respect to Non-Performing Asset Management," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(3), pages 193-202, August.
    3. Vishwas B. & N. Sivakumar, 2016. "Mutual Fund Portfolio Hedging Using Index Futures: An Empirical Analysis," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(3), pages 203-210, August.
    4. Sourour Ramzi & Mohamed Ayadi, 2016. "Assessment of Universities Efficiency Using Data Envelopment Analysis: Weights Restrictions and Super-Efficiency Measure," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(1), pages 40-58, February.
    5. Yiyou Wang, 2016. "An Exploratory Study of Interest Rate Liberalization in Commercial Banks in China," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(4), pages 270-279, November.
    6. Mihir Dash & Ravi Pathak, 2016. "Canonical Correlation Analysis of Asset-Liability Management of Indian Banks," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(2), pages 75-81, May.
    7. Anatoliy G. Goncharuk, 2016. "Banking Sector Challenges in Research," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(1), pages 34-39, February.
    8. repec:ods:journl:v:7:y:2018:i:1:p:15-23 is not listed on IDEAS
    9. repec:ods:journl:v:6:y:2017:i:3:p:186-196 is not listed on IDEAS
    10. Ibrahim A. M. Alsharf, 2017. "Efficiency of Public Healthcare: A Case of Odessa Hospitals," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 6(2), pages 77-81, May.
    11. Mihir Dash & Shyam Lal Dev Pandey, 2016. "Efficiency Measurement for MFIs in India Using the Control-Efficiency Model," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(3), pages 156-161, August.
    12. Anatoliy G. Goncharuk, 2017. "Socioeconomic Criteria of Healthcare Efficiency: An International Comparison," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 6(2), pages 89-95, May.
    13. Anatoliy G. Goncharuk, 2016. "Evaluating the Efficiency of Higher Education," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(2), pages 82-91, May.

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