Cost, revenue and profit efficiency analysis of Indian scheduled commercial banks

Abstract

PurposeThis paper aims to analyze the cost, revenue and profit efficiency performance of Indian scheduled commercial banks. The study also determines differences if any related to efficiency among banks on the basis of ownership pattern.Design/methodology/approachCost, revenue and profit efficiency of banks is calculated by using the non-parametric approach, namely, data envelopment analysis. Further, the differences in the efficiency scores are examined by applying analysis of variance.FindingsIndian scheduled commercial banks have not been able to maintain their input-output synchronization in terms of cost, revenue and profits in the year 2012-2013. Foreign sector banks have higher cost and profit efficiency as compared to their counterparts in private and public sector, whereas public sector banks are found to have been more revenue efficient.Originality/valueWith specific reference to India, less empirical work has been carried out with respect to cost, revenue and profit efficiency. None of the studies have evaluated the sector-wise performance of banks in terms of all three efficiency parameters.