Abstract

This paper analyzes the relationship between deregulation and total factor productivity (TFP) growth in the Indian banking industry using a generalized shadow cost function approach. TFP growth is decomposed into a technological change, a scale, and a miscellaneous component. A disaggregated panel data analysis, using the population of public and private banks over 1985-96 that covers both pre-and post-deregulation periods, indicates that a significant decline in regulatory distortions and the anticipated increase in TFP growth have not yet materialized following deregulation. While private sector banks have improved their performance mainly due to the freedom to expand output, public sector banks have not responded well to the deregulation measures.

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call

Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.