IDEAS home Printed from https://ideas.repec.org/a/ods/journl/v3y2014i3p183-187.html
   My bibliography  Save this article

Efficiency of Public and Private Sector Banks in India

Author

Listed:
  • Sushma Vegesna

    (Quikjet Cargo Airlines Private Limited, India)

  • Mihir Dash

    (Alliance University, India)

Abstract

The Indian banking system is still dominated by the public sector banks, and the issues of performance and efficiency have emerged to be the touchstone for the success of such banks. There is a need to develop a comprehensive framework for measuring their efficiency in transforming their resources for better performance. Such performance benchmarking has become extremely relevant for their success. The current study focuses on the technical efficiency of banks in India using Data Envelopment Analysis (DEA), to identify critical factors affecting the efficiency of banks. The inputs taken include net worth, deposits, borrowings, operating expenses, and fixed assets, while the outputs taken are investments, advances, net interest income and non-interest income. The results of the study show that public sector banks were more efficient than the private sector ones, and that there was a trend decrease in the average level of efficiency. There were also some significant differences in terms of utilization/underutilization of inputs and under-production of outputs.

Suggested Citation

  • Sushma Vegesna & Mihir Dash, 2014. "Efficiency of Public and Private Sector Banks in India," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 3(3), pages 183-187.
    • Handle: RePEc:ods:journl:v:3:y:2014:i:3:p:183-187
    as

    Download full text from publisher

    File URL: http://www.jami.org.ua/Papers/JAMI_3_3_183-187.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Abhiman Das & K. R. Sanmugam, 2004. "Efficiency of Indian commercial banks during the reform period," Industrial Organization 0410005, University Library of Munich, Germany.
    2. Abhiman Das & Ashok Nag & Subhash Ray, 2004. "Liberalization, Ownership, and Efficiency in Indian Banking: A Nonparametric Approach," Working papers 2004-29, University of Connecticut, Department of Economics.
    3. Anatoliy G. Goncharuk, 2013. "About The Influence Of High Gas Price On An Efficiency," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 2(1), pages 58-67.
    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. Saroj Upadhyay & Sudeshna Gupta, 2016. "Taking a Relook into the Decision Making Process in Indian Banking Sector with Respect to Non-Performing Asset Management," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(3), pages 193-202, August.
    2. Mihir Dash & Ravi Pathak, 2016. "Canonical Correlation Analysis of Asset-Liability Management of Indian Banks," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(2), pages 75-81, May.
    3. Anatoliy G. Goncharuk, 2016. "Banking Sector Challenges in Research," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(1), pages 34-39, February.
    4. Mihir Dash & Sadguna Kantheti & Guttula Krishna Teja, 2018. "The Book-to-Market Anomaly for Banking Stocks in the Indian Stock Market: A Panel Regression Analysis," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 7(1), pages 15-23, February.
    5. Hanna Olasiuk, 2017. "Competitive Forces on the Ukrainian Pharmaceutical Market: Evaluation Aspects," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 6(3), pages 186-196, September.
    6. Anatoliy G. Goncharuk, 2017. "Socioeconomic Criteria of Healthcare Efficiency: An International Comparison," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 6(2), pages 89-95, May.
    7. Anatoliy G. Goncharuk, 2016. "Evaluating the Efficiency of Higher Education," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(2), pages 82-91, May.
    8. Anatoliy G. Goncharuk, 2018. "Efficiency vs Effectiveness: Alternative Metrics for Research Performance," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 7(1), pages 24-37, February.
    9. Vishwas B. & N. Sivakumar, 2016. "Mutual Fund Portfolio Hedging Using Index Futures: An Empirical Analysis," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(3), pages 203-210, August.
    10. Sourour Ramzi & Mohamed Ayadi, 2016. "Assessment of Universities Efficiency Using Data Envelopment Analysis: Weights Restrictions and Super-Efficiency Measure," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(1), pages 40-58, February.
    11. Haguiga, M. & Amani, L., 2019. "The Impact of Financial Development on Economic Growth," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 8(2), pages 107-116, May.
    12. Yiyou Wang, 2016. "An Exploratory Study of Interest Rate Liberalization in Commercial Banks in China," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(4), pages 270-279, November.
    13. Ibrahim A. M. Alsharf, 2017. "Efficiency of Public Healthcare: A Case of Odessa Hospitals," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 6(2), pages 77-81, May.
    14. Mihir Dash & Shyam Lal Dev Pandey, 2016. "Efficiency Measurement for MFIs in India Using the Control-Efficiency Model," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(3), pages 156-161, August.

    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. Soedarmono, Wahyoe & Machrouh, Fouad & Tarazi, Amine, 2013. "Bank competition, crisis and risk taking: Evidence from emerging markets in Asia," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 23(C), pages 196-221.
    2. S S Rajan & K L N Reddy & V N Pandit, 2011. "Efficiency and Productivity Growth in Indian Banking," Working Papers id:4359, eSocialSciences.
    3. S. S. Rajan & K. L. N. Reddy & V. N. Pandit, 2011. "Efficiency And Productivity Growth In Indian Banking," Working papers 199, Centre for Development Economics, Delhi School of Economics.
    4. Ghosh, Saibal, 2009. "Financial Deregulation and Profit Efficiency: A Non-parametric Analysis of Indian Banks," MPRA Paper 24292, University Library of Munich, Germany.
    5. 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.
    6. Fadzlan Sufian & Fakarudin Kamarudin, 2014. "The impact of ownership structure on bank productivity and efficiency: Evidence from semi-parametric Malmquist Productivity Index," Cogent Economics & Finance, Taylor & Francis Journals, vol. 2(1), pages 1-27, December.
    7. Hariom Gurjar & Akhilesh Tripathi & Mahesh C. Joshi, 2021. "The Bank Efficiency through Off-Balance Sheet Items’ Window: A Malmquist Approach," Vision, , vol. 25(4), pages 448-459, December.
    8. 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 / Editura Economica, vol. 0(3(628), A), pages 65-82, Autumn.
    9. Gulati, Rachita & Kumar, Sunil, 2016. "Assessing the impact of the global financial crisis on the profit efficiency of Indian banks," Economic Modelling, Elsevier, vol. 58(C), pages 167-181.
    10. Francesco Aiello & Graziella Bonanno, 2018. "On The Sources Of Heterogeneity In Banking Efficiency Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 32(1), pages 194-225, February.
    11. Fujii, Hidemichi & Managi, Shunsuke & Matousek, Roman, 2014. "Indian bank efficiency and productivity changes with undesirable outputs: A disaggregated approach," Journal of Banking & Finance, Elsevier, vol. 38(C), pages 41-50.
    12. K. Hafsal & Anandarao Suvvari & S. Raja Sethu Durai, 2020. "Efficiency of Indian banks with non-performing assets: evidence from two-stage network DEA," Future Business Journal, Springer, vol. 6(1), pages 1-9, December.
    13. Francesco Aiello & Graziella Bonanno, 2016. "Efficiency in banking: a meta-regression analysis," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(1), pages 112-149, January.
    14. Faraji Dizaji , Sajjad, 2013. "Financial Sanctions and Iranian Banks' Performance," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 8(4), pages 99-136, October.
    15. Shakil Quayes & Baqui Khalily, 2013. "Efficiency of Microfinance Institutions in Bangladesh," Working Papers 19, Institute of Microfinance (InM).
    16. Bhattacharyya, Aditi & Pal, Sudeshna, 2013. "Financial reforms and technical efficiency in Indian commercial banking: A generalized stochastic frontier analysis," Review of Financial Economics, Elsevier, vol. 22(3), pages 109-117.
    17. Anatoliy G. Goncharuk, 2016. "Evaluating the Efficiency of Higher Education," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(2), pages 82-91, May.
    18. Sunil Kumar & Rachita Gulati, 2009. "Did efficiency of Indian public sector banks converge with banking reforms?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 56(1), pages 47-84, March.
    19. Aditi Bhattacharyya & Sudeshna Pal, 2013. "Financial reforms and technical efficiency in Indian commercial banking: A generalized stochastic frontier analysis," Review of Financial Economics, John Wiley & Sons, vol. 22(3), pages 109-117, September.
    20. Fadzlan Sufian, 2012. "Determinants of multinational banks’ subsidiary performance: the host and home country effects," Journal of Economic and Administrative Sciences, Emerald Group Publishing Limited, vol. 28(2), pages 130-155, February.

    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:ods:journl:v:3:y:2014:i:3:p:183-187. 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: Anatoliy G. Goncharuk (email available below). General contact details of provider: https://edirc.repec.org/data/dmonaua.html .

    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.