Efficiency and productivity analysis of Indian banking industry using Hicks-Moorsteen approach
International Journal of Productivity and Performance Management
ISSN: 1741-0401
Article publication date: 7 January 2014
Abstract
Purpose
The purpose of this paper is to attempt to measure the performance of the Indian banking sector in terms of efficiency and productivity levels and their determinants during the post-reform period.
Design/methodology/approach
The present study is a novel attempt as it has used pooled data for a duration of 15 years (i.e. 1997/1998-2010/2011) from 59 selected banks for estimating the Hicks-Moorsteen (HM) total factor productivity (TFP) index.
Findings
Poor technical efficiency has experienced with scale efficiency change exerting dominant factors; whereas relatively better productivity growth has been experienced by the banks with major contributions from technical change components. The study found relatively underestimated efficiency and productivity levels by traditional data envelopment analysis-based Malmquist index. Additionally, the study brings into account the results for external and environmental determining factors contributing to the TFP growth.
Originality/value
Using HMTFP indices has helped to eliminate certain drawbacks of data envelopment and provided the more elaborative decomposition of productivity growth along with their components so as to have lucid and multidimensional insights about the performance of the Indian banking industry after the initiation of financial reforms.
Keywords
Acknowledgements
Views expressed in the study are the sole responsibility of the authors and do not necessarily reflect the position of institutions with which they are affiliated. The authors are grateful to anonymous referees for their insightful comments and suggestions on the earlier draft submitted, which significantly improved the exposition of the paper.
Citation
Kumar Sharma, S. and Dalip, R. (2014), "Efficiency and productivity analysis of Indian banking industry using Hicks-Moorsteen approach", International Journal of Productivity and Performance Management, Vol. 63 No. 1, pp. 57-84. https://doi.org/10.1108/IJPPM-09-2012-0096
Publisher
:Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited