Performance of commercial banks in India: a non-parametric Malmquist index-based DEA approach

Abstract

The present study evaluates productivity and efficiency of Indian commercial banks in terms of TFP growth, technological change and technical efficiency performances. Efficiency have been computed using data envelopment analysis-based Malmquist productivity index for the balanced panel data set of 70 commercial banks operating in India from 2005-2017. The analysis has been carried out in two stages, all banks as a single group and three bank categories individually. The results of all banks analysis revealed that, 44% banks have recorded positive change in TFPG and category wise analysis revealed that, technological change is found to be the primary reason for positive change in TFPG of 68% private banks. Also, 15% public sector banks and 32% foreign banks recorded positive TFPG. The study concludes that there is enough scope for improvement in the performance of Indian public sector banks in comparison of its counterparts in terms of productivity and efficiency.