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Liberalisation and Efficiency of Indian Commercial Banks: A Stochastic Frontier Analysis

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  • H P Mahesh

    (Institute for social and Economic Change)

Abstract

The reforms introduced after 1992 are expected to have an impact on the performance of commercial banks. Thus the present study attempts to examine the efficiency level of Indian banks for the period 1985-2004. We employ the technique of stochastic frontier analysis to estimate bank specific post, profit and advance efficiencies. Our results show that deregulation has significant impact on all three types of efficiency measures. Public sector banks rank first in two of the three efficiency measures showing that, as opposed to the general perception, these banks do not lag behind their private counter parts.

Suggested Citation

  • H P Mahesh, 2006. "Liberalisation and Efficiency of Indian Commercial Banks: A Stochastic Frontier Analysis," Working Papers 177, Institute for Social and Economic Change, Bangalore.
    • Handle: RePEc:sch:wpaper:177
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    File URL: http://www.isec.ac.in/WP%20-%20177.pdf
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    References listed on IDEAS

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    Cited by:

    1. Padmasai Arora, 2014. "Reforms, Ownership and Determinants of Efficiency: An Empirical Study of Commercial Banks in India," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 13(1), pages 103-138, April.
    2. Md Zobaer Hasan & Anton Abdulbasah Kamil & Adli Mustafa & Md Azizul Baten, 2012. "A Cobb Douglas Stochastic Frontier Model on Measuring Domestic Bank Efficiency in Malaysia," PLOS ONE, Public Library of Science, vol. 7(8), pages 1-5, August.
    3. K. Ravirajan & K.R. Shanmugam, 2021. "Efficiency of commercial banks in India after global financial crises," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(628), A), pages 65-82, Autumn.
    4. Sunil Kumar, 2013. "Banking reforms and the evolution of cost efficiency in Indian public sector banks," Economic Change and Restructuring, Springer, vol. 46(2), pages 143-182, May.
    5. Nitashree Barman & Dr. Kingshuk Adhikari & Dr. Nikhil Bhusan Dey, 2015. "Technical Efficiency of Public Sector Banks in India : An Empirical Study," Journal of Commerce and Trade, Society for Advanced Management Studies, vol. 10(1), pages 56-65, April.
    6. Jaffry, Shabbar & Ghulam, Yaseen & Cox, Joe, 2013. "Trends in efficiency in response to regulatory reforms: The case of Indian and Pakistani commercial banks," European Journal of Operational Research, Elsevier, vol. 226(1), pages 122-131.
    7. K. Ravirajan & K. R. Shanmugam, 2023. "Efficiency of Commercial Banks in India after Global Financial Crisis," Working Papers 2023-254, Madras School of Economics,Chennai,India.
    8. Muneer Babu M. & Praveen Kulshreshtha, 2014. "Productivity Change and Technical Efficiency in Indian Microfinance Institutions," Studies in Microeconomics, , vol. 2(2), pages 165-200, December.

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