How efficient are public sector banks in India? A non-parametric approach

  • Received February 26, 2020;
    Accepted November 11, 2020;
    Published December 14, 2020
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  • Article Info
    Volume 15 2020, Issue #4, pp. 108-120
  • Cited by
    3 articles

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This work is licensed under a Creative Commons Attribution 4.0 International License

This study examines the efficiency of Public Sector Banks (PSBs) in India using Data Envelopment Analysis (DEA). Analysis is carried out on a sample of 19 PSBs that are existed during the study period from 2005 to 2018. There are two different aspects deliberated, namely technical efficiency of PSBs and the growth in their productivity. Input variables envisaged for the study are deposits, borrowings, fixed assets, and the number of employees. Loans and advances along with investments act as output variables to measure technical efficiency and productivity. The results indicate that the technical efficiency of PSBs ranges between 97% and 100%. Corporation Bank, Indian Bank, and Oriental Bank of Commerce outperformed their peers with 100% technical efficiency. Productivity growth among the sampled banks during the study period stood between 0.8% and 20%. However, Corporation Bank, Indian Bank, and Oriental Bank of Commerce registered 9.1%, 5.4% and 6.4% productivity growth, respectively. The results reveal that PSBs are working hard to optimize resource utilization. Researchers around the world can use DEA as a tool to measure the efficiency of banks with different input and output variables related to financial, marketing and managerial performance.

I like to express my profound thanks to Dr Kishore Selva Babu for rendering his language expertise. I also thank all the anonymous reviewers for their valuable comments and feedback that greatly improved the manuscript.

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    • Table 1. Sector wise asset holding by commercial banks in India
    • Table 2. Technical efficiency and MPI scores and its interpretation
    • Table 3. Describing the technical efficiency (TE) scores of public sector banks in India (2005–2018)
    • Table 4. Describing total factor productivity change of public sector banks in India (2005–2018)
    • Conceptualization
      Sangeetha R
    • Data curation
      Sangeetha R
    • Formal Analysis
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    • Investigation
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    • Methodology
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    • Resources
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    • Software
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    • Supervision
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    • Validation
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    • Visualization
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    • Writing – original draft
      Sangeetha R
    • Writing – review & editing
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