Asset Quality Based Ranking of Indian Commercial Banks: A Superefficiency Approach

The present paper tries to make an asset quality based ranking of select (28) Indian commercial banks for four years period 2001-2002 to 2004-2005 using the super efficiency approach - a non-parametric tool. The super efficiency approach due to Andersen and Petersen (1993), allows rank order technically efficient firms. In this approach, a firm which is under evaluation is not included in the reference set of the relative envelopment model. A firm is called super efficient if its observed output exceeds what is necessary for the firm to be considered efficient relative to other firms in the sample. Out of the 28 observed commercial banks, the number found to be super efficient was only in the range between 5 to 8 during observed years. The rest were found to be inefficient. Further, the results obtained from the exercise indicate gradual improvement in mean technical efficiency scores (excepting 2003-2004) over the observed years. The observed private sector banks exhibit higher mean technical efficiency relative to the observed public sector banks for all the observed years.