IDEAS home Printed from https://ideas.repec.org/a/eee/asieco/v19y2008i3p259-293.html
   My bibliography  Save this article

Labour use efficiency in the Indian and Pakistani commercial banks

Author

Listed:
  • Jaffry, Shabbar
  • Ghulam, Yaseen
  • Cox, Joe

Abstract

The Indian and Pakistani banking industry is said to have an excessive use of labour due to the significant market share of government owned banks. Both countries have undertaken a process of regulatory reform to bring about market discipline in the usage of inputs and to increase the labour use efficiency and productivity. The focus of this paper is the estimation of productivity and efficiency of labour use in the banking sectors of the Indian sub-continent. The results show that the efficiency of labour use across the Indian sub-continent is improving over time and that foreign banks are more efficient compared to domestically owned banks in their usage of labour.

Suggested Citation

  • Jaffry, Shabbar & Ghulam, Yaseen & Cox, Joe, 2008. "Labour use efficiency in the Indian and Pakistani commercial banks," Journal of Asian Economics, Elsevier, vol. 19(3), pages 259-293, June.
    • Handle: RePEc:eee:asieco:v:19:y:2008:i:3:p:259-293
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1049-0078(08)00018-3
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. David A Grigorian & Vlad Manole, 2006. "Determinants of Commercial Bank Performance in Transition: An Application of Data Envelopment Analysis," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 48(3), pages 497-522, September.
    2. Berger, Allen N. & Mester, Loretta J., 2003. "Explaining the dramatic changes in performance of US banks: technological change, deregulation, and dynamic changes in competition," Journal of Financial Intermediation, Elsevier, vol. 12(1), pages 57-95, January.
    3. Amit Bhandari & Almas Heshmati, 2005. "Labour Use and its Adjustment in Indian Manufacturing Industries," Global Economic Review, Taylor & Francis Journals, vol. 34(3), pages 261-290.
    4. Kumbhakar, Subal C & Bhattacharyya, Arunava, 1992. "Price Distortions and Resource-Use Efficiency in Indian Agriculture: A Restricted Profit Function Approach," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 231-239, May.
    5. Humphrey, David B & Pulley, Lawrence B, 1997. "Banks' Responses to Deregulation: Profits, Technology, and Efficiency," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(1), pages 73-93, February.
    6. FECHER, Fabienne & PESTIEAU, Pierre, 1993. "Efficiency and competition in OECD financial services," LIDAM Reprints CORE 1057, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Haouas Ilham & Yagoubi Mahmoud & Heshmati Almas, 2003. "Labor-use Efficiency in Tunisian Manufacturing Industiries," Review of Middle East Economics and Finance, De Gruyter, vol. 1(3), pages 1-20, December.
    8. Berger, Allen N. & Mester, Loretta J., 1997. "Inside the black box: What explains differences in the efficiencies of financial institutions?," Journal of Banking & Finance, Elsevier, vol. 21(7), pages 895-947, July.
    9. Canhoto, Ana & Dermine, Jean, 2003. "A note on banking efficiency in Portugal, New vs. Old banks," Journal of Banking & Finance, Elsevier, vol. 27(11), pages 2087-2098, November.
    10. Benjamin, Dwayne, 1992. "Household Composition, Labor Markets, and Labor Demand: Testing for Separation in Agricultural Household Models," Econometrica, Econometric Society, vol. 60(2), pages 287-322, March.
    11. David Humphrey, 1993. "Cost and technical change: Effects from bank deregulation," Journal of Productivity Analysis, Springer, vol. 4(1), pages 9-34, June.
    12. Victor Mendes & Joao Rebelo, 1999. "Productive efficiency, technological change and productivity in Portuguese banking," Applied Financial Economics, Taylor & Francis Journals, vol. 9(5), pages 513-521.
    13. Maudos, Joaquin & Fernandez de Guevara, Juan, 2004. "Factors explaining the interest margin in the banking sectors of the European Union," Journal of Banking & Finance, Elsevier, vol. 28(9), pages 2259-2281, September.
    14. repec:bla:scandj:v:94:y:1992:i:0:p:s211-28 is not listed on IDEAS
    15. Just, Richard E. & Pope, Rulon D., 1978. "Stochastic specification of production functions and economic implications," Journal of Econometrics, Elsevier, vol. 7(1), pages 67-86, February.
    16. Barbara Casu & Philip Molyneux, 2003. "A comparative study of efficiency in European banking," Applied Economics, Taylor & Francis Journals, vol. 35(17), pages 1865-1876.
    17. Berger, Allen N. & Humphrey, David B., 1997. "Efficiency of financial institutions: International survey and directions for future research," European Journal of Operational Research, Elsevier, vol. 98(2), pages 175-212, April.
    18. Saha, Asish & Ravisankar, T. S., 2000. "Rating of Indian commercial banks: A DEA approach," European Journal of Operational Research, Elsevier, vol. 124(1), pages 187-203, July.
    19. Gilbert, R. Alton & Wheelock, David C. & Wilson, Paul W., 2004. "New evidence on the Fed's productivity in providing payments services," Journal of Banking & Finance, Elsevier, vol. 28(9), pages 2175-2190, September.
    20. Marcel Fafchamps & Agnes R. Quisumbing, 1999. "Human Capital, Productivity, and Labor Allocation in Rural Pakistan," Journal of Human Resources, University of Wisconsin Press, vol. 34(2), pages 369-406.
    21. Abhiman Das & K. R. Sanmugam, 2004. "Efficiency of Indian commercial banks during the reform period," Industrial Organization 0410005, University Library of Munich, Germany.
    22. Mohamed Chaffai & Michel Dietsch & Ana Lozano-Vivas, 2001. "Technological and Environmental Differences in the European Banking Industries," Journal of Financial Services Research, Springer;Western Finance Association, vol. 19(2), pages 147-162, April.
    23. Ruthenberg, David & Elias, Ricky, 1996. "Cost economies and interest rate margins in a unified European banking market," Journal of Economics and Business, Elsevier, vol. 48(3), pages 231-249, August.
    24. Allen N. Berger & David B. Humphrey, 1992. "Measurement and Efficiency Issues in Commercial Banking," NBER Chapters, in: Output Measurement in the Service Sectors, pages 245-300, National Bureau of Economic Research, Inc.
    25. Mukherjee, Kankana & Ray, Subhash C. & Miller, Stephen M., 2001. "Productivity growth in large US commercial banks: The initial post-deregulation experience," Journal of Banking & Finance, Elsevier, vol. 25(5), pages 913-939, May.
    26. Bhaumik, Sumon Kumar & Dimova, Ralitza, 2004. "How important is ownership in a market with level playing field?: The Indian banking sector revisited," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 165-180, March.
    27. Joaquin Maudos & Jose Pastor, 2001. "Cost and profit efficiency in banking: an international comparison of Europe, Japan and the USA," Applied Economics Letters, Taylor & Francis Journals, vol. 8(6), pages 383-387.
    28. Ana Lozano-Vivas & Jesús T. Pastor & Iftekhar Hasan, 2001. "European Bank Performance Beyond Country Borders: What Really Matters?," Review of Finance, European Finance Association, vol. 5(1-2), pages 141-165.
    29. Mester, Loretta J., 1996. "A study of bank efficiency taking into account risk-preferences," Journal of Banking & Finance, Elsevier, vol. 20(6), pages 1025-1045, July.
    30. Barry Howcroft & Ali Ataullah, 2006. "Total factor productivity change: An examination of the commercial banking industry in India and Pakistan," The Service Industries Journal, Taylor & Francis Journals, vol. 26(2), pages 189-202, March.
    31. Deolalikar, Anil B, 1988. "Nutrition and Labor Productivity in Agriculture: Estimates for Rural South India," The Review of Economics and Statistics, MIT Press, vol. 70(3), pages 406-413, August.
    32. Grifell-Tatje, E. & Lovell, C. A. K., 1996. "Deregulation and productivity decline: The case of Spanish bavings banks," European Economic Review, Elsevier, vol. 40(6), pages 1281-1303, June.
    33. Diewert, W E, 1974. "Functional Forms for Revenue and Factor Requirements Functions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 15(1), pages 119-130, February.
    34. Schmidt, Peter & Sickles, Robin C, 1984. "Production Frontiers and Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(4), pages 367-374, October.
    35. Abhiman Das & Saibal Ghosh, 2006. "Financial deregulation and efficiency: An empirical analysis of Indian banks during the post reform period," Review of Financial Economics, John Wiley & Sons, vol. 15(3), pages 193-221.
    36. Sathye, Milind, 2003. "Efficiency of banks in a developing economy: The case of India," European Journal of Operational Research, Elsevier, vol. 148(3), pages 662-671, August.
    37. Allen, Linda & Rai, Anoop, 1996. "Operational efficiency in banking: An international comparison," Journal of Banking & Finance, Elsevier, vol. 20(4), pages 655-672, May.
    38. Dietsch, Michel & Lozano-Vivas, Ana, 2000. "How the environment determines banking efficiency: A comparison between French and Spanish industries," Journal of Banking & Finance, Elsevier, vol. 24(6), pages 985-1004, June.
    39. Ana Lozano-Vivas & Jesús Pastor & José Pastor, 2002. "An Efficiency Comparison of European Banking Systems Operating under Different Environmental Conditions," Journal of Productivity Analysis, Springer, vol. 18(1), pages 59-77, July.
    40. Aly, Hassan Y, et al, 1990. "Technical, Scale, and Allocative Efficiencies in U.S. Banking: An Empirical Investigation," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 211-218, May.
    41. Pastor, JoseManuel & Perez, Francisco & Quesada, Javier, 1997. "Efficiency analysis in banking firms: An international comparison," European Journal of Operational Research, Elsevier, vol. 98(2), pages 395-407, April.
    42. Ali Ataullah & Tony Cockerill & Hang Le, 2004. "Financial liberalization and bank efficiency: a comparative analysis of India and Pakistan," Applied Economics, Taylor & Francis Journals, vol. 36(17), pages 1915-1924.
    43. Kumbhakar, Subal C & Sarkar, Subrata, 2003. "Deregulation, Ownership, and Productivity Growth in the Banking Industry: Evidence from India," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(3), pages 403-424, June.
    44. Bhattacharyya, Arunava & Lovell, C. A. K. & Sahay, Pankaj, 1997. "The impact of liberalization on the productive efficiency of Indian commercial banks," European Journal of Operational Research, Elsevier, vol. 98(2), pages 332-345, April.
    45. Sensarma, Rudra, 2006. "Are foreign banks always the best? Comparison of state-owned, private and foreign banks in India," Economic Modelling, Elsevier, vol. 23(4), pages 717-735, July.
    46. Chaffai, Mohamed E., 1997. "Estimating input-specific technical inefficiency: The case of the Tunisian banking industry," European Journal of Operational Research, Elsevier, vol. 98(2), pages 314-331, April.
    47. Iimi, Atsushi, 2004. "Banking sector reforms in Pakistan: economies of scale and scope, and cost complementarities," Journal of Asian Economics, Elsevier, vol. 15(3), pages 507-528, June.
    48. Altunbas, Y. & Chakravarty, S. P., 1998. "Efficiency measures and the banking structure in Europe," Economics Letters, Elsevier, vol. 60(2), pages 205-208, August.
    49. Almas Heshmati, 2001. "Labour demand and efficiency in Swedish savings banks," Applied Financial Economics, Taylor & Francis Journals, vol. 11(4), pages 423-433.
    50. Berg, Sigbjorn Atle & Forsund, Finn R. & Hjalmarsson, Lennart & Suominen, Matti, 1993. "Banking efficiency in the Nordic countries," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 371-388, April.
    51. Rao, Ananth, 2005. "Cost frontier efficiency and risk-return analysis in an emerging market," International Review of Financial Analysis, Elsevier, vol. 14(3), pages 283-303.
    52. Montek S. Ahluwalia, 2002. "Economic Reforms in India Since 1991: Has Gradualism Worked?," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 67-88, Summer.
    53. Bonaccorsi di Patti, Emilia & Hardy, Daniel C., 2005. "Financial sector liberalization, bank privatization, and efficiency: Evidence from Pakistan," Journal of Banking & Finance, Elsevier, vol. 29(8-9), pages 2381-2406, August.
    54. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mohammad Taghi Amini & Elham Keshavarz & Arezu Keshavarz & Seyed Mohammad Bagheri, 2016. "Prioritisation and performance evaluation of employees at strategic human resource management process using fuzzy AHP and fuzzy TOPSIS methods," International Journal of Productivity and Quality Management, Inderscience Enterprises Ltd, vol. 17(1), pages 61-81.
    2. Yüksel Akay Ünvan & Cansu Ergenç, 2022. "Financial Performance Analysis with the Fuzzy COPRAS and Entropy-COPRAS Approaches," Computational Economics, Springer;Society for Computational Economics, vol. 59(4), pages 1577-1605, April.
    3. Rakshit, Bijoy & Bardhan, Samaresh, 2022. "An empirical investigation of the effects of competition, efficiency and risk-taking on profitability: An application in Indian banking," Journal of Economics and Business, Elsevier, vol. 118(C).
    4. Mohuya Deb Purkayastha & Joyeeta Deb & Ram Pratap Sinha, 2023. "Labour-use Efficiency of Assam Gramin Vikash Bank: Branch- and District-level Analysis," Studies in Microeconomics, , vol. 11(1), pages 60-75, April.
    5. Syed Imran Saqib & Matthew M C Allen & Miguel Martínez Lucio & Maria Allen, 2024. "Sustaining Solidarity through Social Media? Employee Social-Media Groups as an Emerging Platform for Collectivism in Pakistan," Work, Employment & Society, British Sociological Association, vol. 38(3), pages 636-656, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. 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.
    3. Mai, Nhat Chi, 2015. "Efficiency of the banking system in Vietnam under financial liberalization," OSF Preprints qsf6d, Center for Open Science.
    4. Rudra Sensarma, 2008. "Deregulation, ownership and profit performance of banks: evidence from India," Applied Financial Economics, Taylor & Francis Journals, vol. 18(19), pages 1581-1595.
    5. Bos, J.W.B. & Kool, C.J.M., 2006. "Bank efficiency: The role of bank strategy and local market conditions," Journal of Banking & Finance, Elsevier, vol. 30(7), pages 1953-1974, July.
    6. Bos, J.W.B. & Schmiedel, H., 2007. "Is there a single frontier in a single European banking market?," Journal of Banking & Finance, Elsevier, vol. 31(7), pages 2081-2102, July.
    7. Schure, Paul & Wagenvoort, Rien & O'Brien, Dermot, 2004. "The efficiency and the conduct of European banks: Developments after 1992," Review of Financial Economics, Elsevier, vol. 13(4), pages 371-396.
    8. Berger, Allen N. & Humphrey, David B., 1997. "Efficiency of financial institutions: International survey and directions for future research," European Journal of Operational Research, Elsevier, vol. 98(2), pages 175-212, April.
    9. Allen N. Berger, 2007. "International Comparisons of Banking Efficiency," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 16(3), pages 119-144, August.
    10. Sanyal, Paroma & Shankar, Rashmi, 2011. "Ownership, competition, and bank productivity: An analysis of Indian banking in the post-reform period," International Review of Economics & Finance, Elsevier, vol. 20(2), pages 225-247, April.
    11. Carvallo, Oscar & Kasman, Adnan, 2005. "Cost efficiency in the Latin American and Caribbean banking systems," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 15(1), pages 55-72, January.
    12. Tabak, Benjamin M. & Langsch Tecles, Patricia, 2010. "Estimating a Bayesian stochastic frontier for the Indian banking system," International Journal of Production Economics, Elsevier, vol. 125(1), pages 96-110, May.
    13. Jaffry, Shabbar & Ghulam, Yaseen & Pascoe, Sean & Cox, Joe, 2007. "Regulatory changes and productivity of the banking sector in the Indian sub-continent," Journal of Asian Economics, Elsevier, vol. 18(3), pages 415-438, June.
    14. Adnan Kasman & Saadet Kirbas-Kasman, 2006. "Technical Change in Banking: Evidence From Transition Countries," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 13(1), pages 129-144.
    15. Fethi, Meryem Duygun & Pasiouras, Fotios, 2010. "Assessing bank efficiency and performance with operational research and artificial intelligence techniques: A survey," European Journal of Operational Research, Elsevier, vol. 204(2), pages 189-198, July.
    16. Meryem Duygun Fethi & Mohamed Shaban & Thomas Weyman-Jones, 2009. "Liberalisation, privatisation and the productivity of Egyptian banks: a non-parametric approach," The Service Industries Journal, Taylor & Francis Journals, vol. 31(7), pages 1143-1163, September.
    17. Fotios Pasiouras, 2008. "International evidence on the impact of regulations and supervision on banks’ technical efficiency: an application of two-stage data envelopment analysis," Review of Quantitative Finance and Accounting, Springer, vol. 30(2), pages 187-223, February.
    18. Williams, Jonathan & Nguyen, Nghia, 2005. "Financial liberalisation, crisis, and restructuring: A comparative study of bank performance and bank governance in South East Asia," Journal of Banking & Finance, Elsevier, vol. 29(8-9), pages 2119-2154, August.
    19. Belousova, Veronika & Karminsky, Alexander & Kozyr, Ilya, 2018. "The macroeconomic and institutional determinants of the profit efficiency frontier for Russian banks," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 49, pages 91-114.
    20. Lee, Chi-Chuan & Huang, Tai-Hsin, 2016. "Productivity changes in pre-crisis Western European banks: Does scale effect really matter?," The North American Journal of Economics and Finance, Elsevier, vol. 36(C), pages 29-48.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:asieco:v:19:y:2008:i:3:p:259-293. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/asieco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.