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A Survey of Empirical Literature on Bank Efficiency

In: Deregulation and Efficiency of Indian Banks

Author

Listed:
  • Sunil Kumar

    (South Asian University)

  • Rachita Gulati

    (Indian Institute of Technology Roorkee)

Abstract

This chapter presents a survey of empirical literature on bank efficiency. Four key research areas have been identified where most of the research efforts have been devoted in last two decades. These research areas are (i) impact of financial deregulation on bank efficiency, (ii) bank efficiency across ownership types, (iii) cross-country differences in bank efficiency, and (iv) impact of mergers and acquisitions on bank efficiency. In addition, two prominent research issues in the banking efficiency literature have also been discussed in this chapter. The first issue relates with the selection and specification of inputs and outputs in a study on the subject matter. The second issue is on the selection of appropriate frontier efficiency technique to measure bank efficiency. Regarding the first issue, we note that though both intermediation and production approaches are not perfect to model the production process of banking firms, but the former dominates the latter in the empirical applications because it is better suited to capture the decisions taken to minimize the cost of the financing mix. On the second issue, we note that a bank’s efficiency score can differ completely due to the measurement technique, and there is virtually no consensus on the preferred estimation method of bank efficiency.

Suggested Citation

  • Sunil Kumar & Rachita Gulati, 2014. "A Survey of Empirical Literature on Bank Efficiency," India Studies in Business and Economics, in: Deregulation and Efficiency of Indian Banks, edition 127, chapter 0, pages 119-165, Springer.
    • Handle: RePEc:spr:isbchp:978-81-322-1545-5_4
    DOI: 10.1007/978-81-322-1545-5_4
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    Citations

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    Cited by:

    1. Nisar Ahmad & Amjad Naveed & Shabbir Ahmad & Irfan Butt, 2020. "Banking Sector Performance, Profitability, And Efficiency: A Citation‐Based Systematic Literature Review," Journal of Economic Surveys, Wiley Blackwell, vol. 34(1), pages 185-218, February.
    2. Mohammad Nourani & Irene Wei Kiong Ting & Wen-Min Lu & Qian Long Kweh, 2019. "Capital Structure And Dynamic Performance: Evidence From Asean-5 Banks," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(03), pages 495-516, June.
    3. Facundo Costa de Arguibel & Carolina Wittig & Juan Antonio Dip, 2023. "Estructura de Propiedad, Origen de Capital y Eficiencia Bancaria: Evidencia para A," Working Papers 251, Red Nacional de Investigadores en Economía (RedNIE).
    4. Abdul Qayyum & Khalid Riaz, 2018. "Incorporating Credit Quality in Bank Efficiency Measurements: A Directional Distance Function Approach," JRFM, MDPI, vol. 11(4), pages 1-19, November.
    5. Alves, André Bernardo & Wanke, Peter & Antunes, Jorge & Chen, Zhongfei, 2020. "Endogenous network efficiency, macroeconomy, and competition: Evidence from the Portuguese banking industry," The North American Journal of Economics and Finance, Elsevier, vol. 52(C).
    6. Huaqing Wu & Jingyu Yang & Wensheng Wu & Ya Chen, 2023. "Interest rate liberalization and bank efficiency: A DEA analysis of Chinese commercial banks," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 31(2), pages 467-498, June.
    7. Nina Siniţîn, 2021. "A Survey Of Literature Review On Bank Preformance," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 235-241, July.

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