Evaluating the performance of Indian banking sector using DEA during post-reform and global financial crisis

Mukesh Kumar*, Vincent Charles, Chandra Sekhar Mishra

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

35 Citations (Scopus)
12 Downloads (Pure)

Abstract

The purpose of the study is to examine the performance of Indian banking sector in terms of efficiency, returns to scale, and total factor productivity change. The technique of data envelopment analysis is applied due to its flexibility to incorporate multiple inputs and multiple outputs without any underlying assumption on the functional form. There is growing tendency of public sector banks operating under increasing returns to scale, implying that substantial gains could be obtained from altering scale via either internal growth or consolidation in the sector. In terms of productivity, the results show a positive change in both the sectors due to technological change, possibly as a result of adoption of latest technology and new business practices in post reform period. However, there is an evidence of shrink in the market and negative growth in productivity in both the sectors during the period of global financial crisis. The main contribution of the paper is to empirically provide the evidences to resolve the debate if the global financial crisis had any impact on the performance of banking sector in India.

Original languageEnglish
Pages (from-to)156-172
Number of pages17
JournalJournal of Business Economics and Management
Volume17
Issue number1
DOIs
Publication statusPublished - 02 Jan 2016
Externally publishedYes

Keywords

  • data envelopment analysis
  • efficiency
  • global financial crisis
  • Indian banking sector
  • returns to scale
  • total factor productivity change

ASJC Scopus subject areas

  • Business, Management and Accounting (miscellaneous)
  • Economics and Econometrics

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