Open AccessAnalysis of Technical Efficiency of Indian Banking Sector
Author(s) -
Dipayan Roy
Publication year - 2014
Publication title -
international journal of finance and banking studies
Language(s) - English
Resource type - Journals
ISSN - 2147-4486
DOI - 10.20525/ijfbs.v3i1.176
Subject(s) - inefficiency , intermediation , data envelopment analysis , business , directive , financial system , industrial organization , capital (architecture) , banking industry , capital adequacy ratio , economics , finance , market economy , computer science , mathematical optimization , mathematics , archaeology , incentive , history , programming language
The proactively evolved banking regulations in the Indian Banking sector under the authorative directive of the Reserve bank of India (RBI) has often brought about a change in the business strategy, capital structure and operations of the banks in the Indian banking sector. During these events of continuous change and adoption of Basel norms, we analyse the efficiency of the Indian banking sector with using Data Envelopment Analysis across three economic eras andacross the different ownership structures. The determinants of efficiency are selected on the basis of intermediation approach. We also attempt to identify whether the inefficiency arises from managerial incompetence or improper size and resource allocation. From our analysis, we identify the main cause of inefficiency in the Indian Banking sector to be arising out of improper size allocation.