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An Enquiry into Technical, Pure Technical, and Scale Efficiencies of Indian Public and Private Banks in Post Global Financial Crisis Period


Affiliations
1 Assistant Professor, Department of Commerce, Vasanta College for Women, Rajghat Fort, Varanasi, Uttar Pradesh, India
2 Professor, Faculty of Commerce, Banaras Hindu University, Varanasi, Uttar Pradesh, India
     

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The present study aims to measure the overall technical efficiency, pure technical efficiency, and scale efficiency of 18 Indian private banks and 12 public banks for 2011-2021. Using DEA, the study has found that private banks are more input efficient (78.98%) than public banks (77.13%). The decomposition of efficiency under the variable returns to scale (VRS) assumption has shown that private banks are technically more input efficient (88.33%) than public banks (80.95%) and that public banks are more scale efficient (95.55%) than their private counterparts (89.42%). Analysis of bank group-wise returns to scale has shown that 65.15% of the private banks need to increase their scale size, and 16.16% of the public banks need to reduce their scale size so as to operate at the efficient frontier. Also, it is evident that the prime cause of inefficiency in public banks is managerial inefficiency. However, in private banks, there is only a marginal difference between managerial inefficiency and scale inefficiency.

Keywords

Public Banks, Private Banks, Data Envelopment Analysis, Pure Technical Efficiency and Scale Efficiency.
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  • An Enquiry into Technical, Pure Technical, and Scale Efficiencies of Indian Public and Private Banks in Post Global Financial Crisis Period

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Authors

Rashika Jain
Assistant Professor, Department of Commerce, Vasanta College for Women, Rajghat Fort, Varanasi, Uttar Pradesh, India
B.K. Singh
Professor, Faculty of Commerce, Banaras Hindu University, Varanasi, Uttar Pradesh, India

Abstract


The present study aims to measure the overall technical efficiency, pure technical efficiency, and scale efficiency of 18 Indian private banks and 12 public banks for 2011-2021. Using DEA, the study has found that private banks are more input efficient (78.98%) than public banks (77.13%). The decomposition of efficiency under the variable returns to scale (VRS) assumption has shown that private banks are technically more input efficient (88.33%) than public banks (80.95%) and that public banks are more scale efficient (95.55%) than their private counterparts (89.42%). Analysis of bank group-wise returns to scale has shown that 65.15% of the private banks need to increase their scale size, and 16.16% of the public banks need to reduce their scale size so as to operate at the efficient frontier. Also, it is evident that the prime cause of inefficiency in public banks is managerial inefficiency. However, in private banks, there is only a marginal difference between managerial inefficiency and scale inefficiency.

Keywords


Public Banks, Private Banks, Data Envelopment Analysis, Pure Technical Efficiency and Scale Efficiency.

References