Volume 2, Issue 2, April 2013, Page: 15-21
A Study on Technical Efficiency of Public Sector Banks in India
Sangeetha R., Assistant Professor, Department of Management Studies, Christ University, Hosur Road, Bangalore
Jain Mathew, Professor & Head, Department of Management Studies, Christ University, Hosur Road, Bangalore
Received: Feb. 6, 2013;       Published: Apr. 2, 2013
DOI: 10.11648/j.ijber.20130202.11      View  3007      Downloads  175
Banking companies in the service sector exhibit the problem of distinct results in terms of efficiency. This problem is a cause of concern for many big organizations in the service sector like hotels, courier companies, hospitals, banks and so on. In particular, the last decade has observed continuous amendment in regulation, technology and competition in the global financial services industry, and Indian banks are no exception. To measure the stability, sustainability and profitability of the banking system, it is therefore crucial to scale the operations of banks performing in India. A well-organized banking system will provide an extensive way to higher economic growth in any country. Thus, evaluating the technical efficiency is important to depositors, owners, potential investors, managers and to policy makers. The present study investigates the technical efficiency of public sector banks in India by considering the study period between 2008-09 and 2010-11and using the data extracted from RBI website (www.rbi.org.in) and IBA website (www.iba.org.in). For this purpose, the data envelopment analysis (DEA) was used with two input variables (Interest expenses and operating expenses) and two output variables (interest income and other income). The efficiency scores were calculated for a sample of twenty-six public sector banks operating in India. The result shows that Corporation Bank, State Bank of India and IDBI were consistently performed efficiently in all the years under study.
Technical efficiency, DEA and Banking
To cite this article
Sangeetha R., Jain Mathew, A Study on Technical Efficiency of Public Sector Banks in India, International Journal of Business and Economics Research. Vol. 2, No. 2, 2013, pp. 15-21. doi: 10.11648/j.ijber.20130202.11
Bhattacharya, A. L. (1997). The impact of liberalization on th eproductive effieciency of Indian Commercial Banks. European Journal of Operational Research, 332-345.
Charnes, A. C. (1978). Measuring the efficiency of decision making units. European journal of opearational research, 2(6), 429-44.
Dynamics of Inidan Banking views and vistas. (2008). New Delhi: Atlantic publishers and distributors.
Gupta, P. K., & Garg, S. (2011, July - December). Measuring technical efficiency of commercial banks through data envelopment analysis. NICE Journal of Business, 6(2), 55-65.
Haque, A., & Tariq, A. (2012). Efficiency of banks in Pakistan: A non parametric approach. Business and Economic Research, 2(1), 1-12.
Jesus T. Pastor, A. L. (1997). Efficiency of European Banking Systems: A Correction By Environmental Variables. Working Paper.
Kumar, A., & Batra, V. (2012). Efficiency analysis of India banks (2006 - 2011): An application of Malmquist Productivity Index. National conference on emerging challenges for sustainable business, (pp. 56-80). Noida.
Kumar, P. (2006). Banking sector efficiency in gloalised economy. New Delhi: Deep & Deep Publications PVT ltd.
Kunmar, S., & Gulati, R. (2008). Evaluation of technical efficiency and ranking of public sector banks in India. International Journal of Productivity and Performance Management, 57(7), 540-568.
Misra, B. S. (2003, Winter). Allocative Efficiency of the Indian Banking System in the Post Reform Period: A State Level Analysis. Reserve Bank of India Occasional Papers, 24(3), 161-186.
O, A. A., & T, O. L. (2010). Technical and Scale Efficiency of Commercial Banks in Nigeria. The IUP journal of Applied Economics, IX(4), 59-68. Retrieved October 2012
Rangarajan, D. C. (2011). The Indian Banking System - Challenges Ahead. BANCON2011 (pp. 1-15). Chennai: IOB and IBA.
Rezvanian, R., Rao, N., & Mehdian, S. M. (2008). Efficiency changem technological progress and productivity growth of private, public and foreign banks in India: evidence from the post liberalisation era. 18, 701-713.
Sathye, M. (2003). Efficiency of banks in developing economy: The case of India. European Journal of Operational Research, 148(3), 662-671.
Sufian, F. (2010). The impact of risk on bank's technical and scale effficiency: Empirical evidence from the Chinese banking sector. The IUP journal of Financial Economics, VIII(1&2), 83-102.
Browse journals by subject