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Bank effi ciency measurement using alternative techniques of frontier analysis: evidence from India

Author

Listed:
  • Muneesh Kumar

    (Department of Financial Studies, University of Delhi)

  • Padmasai Arora

    (Department of Commerce, Keshav Mahavidyalaya, University of Delhi)

Abstract

Banks need to target enhanced levels of effi ciency in order to survive and grow in the present economic conditions. A quantitative assessment of the effi ciency of banks in an economy proves to be crucial for formulating strategies for effi ciency enhancements. The alternative techniques of effi ciency measurement in banks are distinct in terms of construct and approach and thus may offer different results. The difference in the results may be considerable in the case of banking systems in emerging economies. This paper examines the effi ciency in the Indian banking sector during the post reforms period 1991–1992 to 2006–2007 using two popular Frontier analysis techniques, namely data envelopment analysis (DEA) and stochastic frontier analysis (SFA), as alternative techniques of effi ciency measurement. The paper offers evidence in support of confl icting results provided by the two techniques, though both indicate effi ciency gains in the period of study.

Suggested Citation

  • Muneesh Kumar & Padmasai Arora, 2010. "Bank effi ciency measurement using alternative techniques of frontier analysis: evidence from India," Working Papers 1304, Groupe ESC Pau, Research Department, revised Dec 2010.
    • Handle: RePEc:pau:wpaper:1304
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    File URL: https://www.esc-pau.fr/faculte-recherche/documents/cahiers/cahier_recherche13_escpau.pdf
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    Cited by:

    1. Francesco Aiello & Graziella Bonanno, 2018. "On The Sources Of Heterogeneity In Banking Efficiency Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 32(1), pages 194-225, February.
    2. Francesco Aiello & Graziella Bonanno, 2016. "Efficiency in banking: a meta-regression analysis," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(1), pages 112-149, January.

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