Preview

Comparison Between Public and Private Sector Banks

Powerful Essays
Open Document
Open Document
7601 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Comparison Between Public and Private Sector Banks
University of Connecticut

DigitalCommons@UConn
Economics Working Papers Department of Economics

9-1-2004

Productivity Growth and Efficiency in Indian Banking: A Comparison of Public, Private, and Foreign Banks
T.T. Ram Mohan
Indian Institute of Management, Ahmedabad

Subhash C. Ray
University of Connecticut

Recommended Citation
Mohan, T.T. Ram and Ray, Subhash C., "Productivity Growth and Efficiency in Indian Banking: A Comparison of Public, Private, and Foreign Banks" (2004). Economics Working Papers. Paper 200427. http://digitalcommons.uconn.edu/econ_wpapers/200427

This is brought to you for free and open access by the Department of Economics at DigitalCommons@UConn. It has been accepted for inclusion in Economics Working Papers by an authorized administrator of DigitalCommons@UConn. For more information, please contact digitalcommons@uconn.edu.

Department of Economics Working Paper Series
Productivity Growth and Efficiency in Indian Banking: A Comparison of Public, Private, and Foreign Banks T. T. Ram Mohan
Indian Institute of Management, Ahmedabad

Subhash Ray
University of Connecticut

Working Paper 2004-27 September 2004

341 Mansfield Road, Unit 1063 Storrs, CT 06269–1063 Phone: (860) 486–3022 Fax: (860) 486–4463 http://www.econ.uconn.edu/

Abstract
India’s public sector banks (PSBs) are compared unfavorably with their private sector counterparts, domestic and foreign. This comparison rests, for the most part, on financial measures of performance, and such a comparison provides much of the rationale for privatization of PSBs.In this paper, we attempt a comparison between PSBs and their private sector counterparts based on measures of productivity that use quantities of outputs and inputs. We employ two measures of productivity: Tornqvist and Malmquist total factor productivity growth. We attempt these comparisons over the period 1992-2000, comparing PSBs with both domestic private and foreign banks. Out of a total of four comparisons we have made, there


References: Banker, R.D., A. Charnes, and W.W. Cooper (1984), “Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis,” Management Science, 30:9 (September), 1078-92. Sarkar, Jayati, Sarkar, Subrata and Bhaumik, Suman K. (1998) ‘Does ownership always matter? – evidence from the Indian banking industry’, Journal of Comparative Economics 26: 262-81.
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Powerful Essays

    Swot Analysis of Banking Industry
    • 1335 Words
    • 6 Pages

    Swot Analysis of Banking Industry

    The banking system in India is significantly different from that of the other Asian nations, because of the country’s unique geographic, social, and economic characteristics. Though the sector opened up quite late in India compared to other developed nations, like the US and the UK, the profitability of Indian banking sector is at par with that of the developed countries and at times even better on some parameters. For instance, return on equity and assets of the Indian banks are on par with Asian banks, and higher when compared to that of the US and the UK.…

    • 1335 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Best Essays

    The Impact of Customer Relationship Management Implementation on the UK Commercial Banking Industry
    • 2439 Words
    • 10 Pages

    The Impact of Customer Relationship Management Implementation on the UK Commercial Banking Industry

    Bauer, P., Berger, A. and Humphrey, D. (1993), “Efficiency and Productivity Growth in US Banking,” in The Measurement of Productivity Efficiency, H. Fried, C.A. Knox Lovell, and S. Schmidt, eds. New York: Oxford University Press, 386–413.…

    • 2439 Words
    • 10 Pages
    Best Essays
    Read More
  • Powerful Essays

    Organizational Citizenship Behavior
    • 4848 Words
    • 20 Pages

    Organizational Citizenship Behavior

    Performance measure of the banking sector highly correlated with subsequent GDP per capita growth. Moreover, emerging evidence suggests that the level of banking sector development wields a fundamental impact on economic growth. During last few years banking industry has developed by leaps and bounds in Pakistan. A number of foreign banks have been established here along with the emerging Pakistani banks. This situation has created an environment of intense competition in banking sector which lead in improvement of quality in services and products of banks to survive in the competitive market.…

    • 4848 Words
    • 20 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Analysis on Capital Structure, Dividend Policy & Working Capital Requirements of
    • 1401 Words
    • 6 Pages

    Analysis on Capital Structure, Dividend Policy & Working Capital Requirements of

    SELDOM CORPORATE India recognizes a PSU (Public Sector Unit) and considers its executives worthy of an award for efficiency and business performance. In the corporate arena, ICICI, HDFC, HSBC etc. are the banks which are always considered for one award or the other. Some PSU banks have won awards in the past but those awards were for achieving computerization and other such ‘achievements’. Seldom has a a PSU bank been seen by corporate India as a potential avenue and as one capable of scaling new heights in the banking industry with the presence of more competitive private banks.…

    • 1401 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    A Study on Performance Evaluation of Icici and Sbi Using Fundamental and Technical Analysis
    • 1132 Words
    • 5 Pages

    A Study on Performance Evaluation of Icici and Sbi Using Fundamental and Technical Analysis

    Most of researcher’s conclusion is, Whether or not the sectors actually opens up in 2009, banks should use that as an opportunity to get their growth strategies in place. Not Just through organic growth, but growth through mergers and acquisition. What India need is not a large number of small banks, but a small number of large banks.…

    • 1132 Words
    • 5 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Impact of Merger and Acquisitions on Banks Financial Performance
    • 5754 Words
    • 24 Pages

    Impact of Merger and Acquisitions on Banks Financial Performance

    Sufian, F. (2004). THE EFFICIENCY EFFECTS OF BANK MERGERS AND ACQUISITIONS IN A DEVELOPING ECONOMY:EVIDENCE FROM MALAYSIA. International Journal of Applied Econometrics and Quantitative Studies , 53-74.…

    • 5754 Words
    • 24 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Cost Economies in Eu Banking Systems
    • 6721 Words
    • 27 Pages

    Cost Economies in Eu Banking Systems

    References: Allen, L. and Rai, A. 1993. Global Financial Intermediation: UniL,ersal L~ersus Specialised Banking. Paper presented at the 20th Annual Meeting of the European Finance Association, Copenhagen Business School, Aug. 26-28. Published in Section II-D of The proceeding, pp. 1-33 (forthcoming Journal of Banking and Finance). Baldini, D. and Landi, A. 1990. Economie di scala e complementariteta ' di costa nell 'indutria bancaria italiana. L 'lndustria 1:25-45. Barnes, P. and Dodds, C. 1983. The structure and performance of the UK building society industry 1970-78. Journal of Business, Finance and Accounting 10:37-56. Barren, A. P. 1969. Maximum likelihood estimation of a complete system of demand equations. European Economic Ret~iew Sept./Dec.( 1): 12-34. Berger, A. and Humphrey, D. 1992. In Measurement of Efficiency in Banking in Grilliches. (2nd ed.) Output measurement in the service sectors. Chicago: NEBR, pp. 245-279. Berger, A. N., Hanweck, G. A. and Humphrey, D. B. 1986. Competitit;e Viability in Banking." Scale, Scope and Product Mix Economies. Research papers in banking and financial economics. Washington, DC: Federal Reserve Board. Berger, A. N., Hanweck, G. A. and Humphrey, D. B. 1987. Competitive viability in banking: Scalc, scope and product mix economies. Journal of Monetary Economics 20:501-520. Berger, A. N., Hunter, W. C. and Timme, S. G. 1993. The efficiency of financial institutions: A review and preview of research past, present, and future. Journal of Banking and Finance 17:221-249. Berndt, E. R., Hall, B. E. and Hausman, J. A. April 1974. Estimation and inference in nonlinear structural models. Annals of Economic and Social Measurement 3:653-665. Christensen, L. R. and Greene, W. 1976. Economies of scale in U.S. power generation. Journal of Political Economy 84:655-676. Christensen, L. R., Jorgenson, D. E. and Lau, L. J. 1973. Transcendental logarithmic production frontiers. Ret~iew of Economics and Statistics 55:28-45.…

    • 6721 Words
    • 27 Pages
    Powerful Essays
    Read More
  • Better Essays

    Literature Review of Bank Efficiency
    • 424 Words
    • 2 Pages

    Literature Review of Bank Efficiency

    Measuring the efficiency and productivity of banking firms has been playing a predominant role in helping managers or regulators to achieve a better understanding of the success or failure of policy strategies and make better decisions. Furthermore, the evaluation results of efficiency are also of major importance to stock owners, depositors and investors.…

    • 424 Words
    • 2 Pages
    Better Essays
    Read More
  • Powerful Essays

    Performance Analysis of Various Public Sector Banks
    • 3023 Words
    • 13 Pages

    Performance Analysis of Various Public Sector Banks

    PERFORMANCE ANALYSIS OF PUBLIC SECTOR BANKS (BANK OF INDIA AND PUNJAB NATIONAL BANK) AND THEIR COMPARATIVE ANALYSIS…

    • 3023 Words
    • 13 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Management of Change in Banking Sector
    • 1439 Words
    • 6 Pages

    Management of Change in Banking Sector

    For the past three decades India's banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reason of India's growth process.…

    • 1439 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Good Essays

    Economic Reforms Of The Banking Sector In India
    • 569 Words
    • 3 Pages

    Economic Reforms Of The Banking Sector In India

    Indian banking sector has undergone major changes and reforms during economic reforms. Though it was a part of overall economic reforms, it has changed the very functioning of Indian banks. This reform have not only influenced the productivity and efficiency of many of the Indian Banks, but has left everlasting footprints on the working of the banking sector in India.…

    • 569 Words
    • 3 Pages
    Good Essays
    Read More
  • Powerful Essays

    treasury management in Indian bank
    • 3370 Words
    • 14 Pages

    treasury management in Indian bank

    McKinsey’s survey on banking shows that Indian leading banks have done remarkably good in increasing shareholder’s value, allocating capital effectively, and contributing to GDP growth. However, in comparison to international peers, Indian banks could do more to foster financial inclusion and manage intermediation costs.…

    • 3370 Words
    • 14 Pages
    Powerful Essays
    Read More
  • Good Essays

    Effeciency of the Banking System
    • 864 Words
    • 4 Pages

    Effeciency of the Banking System

    Efficiency in banking has been defined and studied in different dimensions including: (i) scale efficiency, which refers to relationship between the level of output and the average cost of Private Banks; (ii) Scope efficiency, which refers to relationship between average cost and production of diversified output varieties; and (iii) Operational efficiency, a wide concept sometimes referred to as x-efficiency, which measures deviation from the cost efficient frontier that represents the maximum attainable output for the given level of inputs. With reference to various definitions, inefficiency is therefore a multifaceted concept with several meanings depending on the perspective in which it is used.…

    • 864 Words
    • 4 Pages
    Good Essays
    Read More
  • Powerful Essays

    India's Development Experience
    • 12363 Words
    • 50 Pages

    India's Development Experience

    this lag to the timing of changes in the international financial system that was a prerequisite for…

    • 12363 Words
    • 50 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Banking Project
    • 13395 Words
    • 54 Pages

    Banking Project

    India cannot have a healthy economy without a sound and effective banking system. The banking system should be hassle free and able to meet the new challenges posed by technology and other factors, both internal and external. In the past three decades, India's banking system has earned several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to metropolises or cities in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main aspects of India's growth story.…

    • 13395 Words
    • 54 Pages
    Powerful Essays
    Read More