Title: Measuring performance of Indian banks: an application Data Envelopment Analysis

Authors: Roma Mitra Debnath, Ravi Shankar

Addresses: Institute for Integrated Learning in Management, 3, Lodhi Institutional Area, Lodhi Road, New Delhi 110 003, India. ' Indian Institute of Technology Delhi, Department of Management Studies, Vishwakarma Building, Hauz Khas, New Delhi 110 016, India

Abstract: A stable and efficient banking sector is an essential precondition to increase the economic level of a country. This paper tries to model and evaluate the efficiency of 50 Indian banks by using Data Envelopment Analysis (DEA). DEA is capable of handling multiple inputs and outputs and the sources of inefficiency can be analysed and quantified for every evaluated unit. The aim of this paper is to estimate and compare efficiency of the banking sector in India. The analysis is supposed to verify or reject the hypothesis whether the banking sector fulfils its intermediation function sufficiently to compete with the global players. The results are insightful to the financial policy planner as it identifies priority areas for different banks, which can improve the performance. This paper evaluates the performance of Banking Sectors in India.

Keywords: banking sector; performance evaluation; data envelopment analysis; DEA; India; banking efficiency.

DOI: 10.1504/IJBPM.2008.015921

International Journal of Business Performance Management, 2008 Vol.10 No.1, pp.57 - 85

Published online: 02 Dec 2007 *

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