Title: Assessing the productivity growth of Indian banks during the post-deregulation period using non-radial Malmquist productivity index

Authors: Rachita Gulati; Sunil Kumar

Addresses: Department of Humanities and Social Sciences, Indian Institute of Technology (IIT) Roorkee, Roorkee-247667, Uttrakhand, India ' Faculty of Economics, South Asian University, New Delhi-110021, India

Abstract: By using an unbalanced panel dataset for the period 1991-1992 through 2007-2008 and employing non-radial Malmquist productivity index approach, this paper examines the evolution of total factor productivity (TFP) change in Indian banks, and identifies dominant source of productivity change. The empirical results indicate that TFP in Indian banking industry followed an uptrend during the post-deregulation period, albeit the trend was modest. Further, the observed productivity growth was almost entirely attributable to technological progress. While the public sector banks made steadier progress in productivity, the de novo private banks outperformed their peers. The empirical findings also reflect the enormous relevance of foreign ownership in Indian banking industry since foreign banks have emerged as the leading technological innovators in the banking system.

Keywords: non-radial Malmquist productivity index; total factor productivity growth; technological change; technical efficiency; India; bank productivity; banking industry; post-deregulation; foreign ownership; foreign banks; technological innovation.

DOI: 10.1504/IJOR.2016.073955

International Journal of Operational Research, 2016 Vol.25 No.2, pp.169 - 195

Received: 07 Sep 2013
Accepted: 16 Jan 2014

Published online: 31 Dec 2015 *

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