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Analysis of Technical Efficiency of Indian Banking Sector: An Application of Data Envelopment Analysis

Author

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  • Dipayan Roy

    (Indian Institute of Management, Indore, India)

Abstract

The proactively evolved banking regulations in the Indian Banking sector under the authorative directive of the Reserve bank of India (RBI) has often brought about a change in the business strategy, capital structure and operations of the banks in the Indian banking sector. During theseevents of continuous change and adoption of Basel norms, we analyse the efficiency of the Indian banking sector with using Data Envelopment Analysis across three economic eras andacross thedifferent ownership structures. The determinants of efficiency are selected on the basis of intermediation approach. We also attempt to identify whether the inefficiency arises from managerial incompetence or improper size and resource allocation. From our analysis, we identify the main cause of inefficiency in the Indian Bankingsector to be arising out of improper size allocation.

Suggested Citation

  • Dipayan Roy, 2014. "Analysis of Technical Efficiency of Indian Banking Sector: An Application of Data Envelopment Analysis," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 3(1), pages 150-160, January.
  • Handle: RePEc:rbs:ijfbss:v:3:y:2014:i:1:p:150-160
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    Cited by:

    1. Sanjukta Sarkar, 2016. "The Dynamics of Revenue Diversification and Efficiency of Banks in India," IIM Kozhikode Society & Management Review, , vol. 5(2), pages 156-172, July.
    2. Bijoy Rakshit & Samaresh Bardhan, 2022. "Does Bank Efficiency Enhance Bank Performance? Empirical Evidence From Indian Banking," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 25(Special I), pages 103-124, March.

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