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Labor-Use Efficiency in Indian Banking: A Branch Level Analysis

  • Abhiman Das

    (Reserve Bank of India)

  • Subhash C. Ray

    (University of Connecticut)

  • Ashok Nag

    (Reserve Bank of India)

This paper uses Data Envelopment Analysis to measure labor use efficiency of individual branches of a large public sector bank with several thousand branches across India. We find considerable variation in the average levels of efficiency across the four metropolitan regions considered in this study. In this context, we introduce the concept of area or spatial efficiency for each region relative to the nation as a whole. Our findings suggest that the policies, procedures, and incentives handed down from the corporate level cannot fully neutralize the influence of the local work culture in the different regions. Most of the potential reduction in labor cost appears to be coming from possible downsizing the clerical and subordinate staff. Our analysis identifies branches that operate at very low levels of efficiency and may be gainfully merged with other branches wherever possible.

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Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2005-04.

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Length: 26 pages
Date of creation: Mar 2005
Date of revision:
Handle: RePEc:uct:uconnp:2005-04
Note: Views expressed in this paper are the sole responsibility of the authors and do not necessarily reflect the position of the institutions with which they are affiliated.
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