Title: Measurement and evaluation of cost, revenue and profit efficiency of public sector banks in India

Authors: Aparna Bhatia; Megha Mahendru

Addresses: Department of Commerce, Guru Nanak Dev University, Amritsar 143005, India ' Department of Commerce, Guru Nanak Dev University, Amritsar 143005, India

Abstract: The aim of the paper is to analyse and evaluate cost, revenue and profit efficiency scores of public sector banks (PSBs) in India during the period 2007-2008 to 2012-2013 by the application of data envelopment analysis (DEA)-a non-parametric approach. The paper also examines the efficiency of individual PSBs and identifies the most and the least efficient bank. The sample consists of 26 PSBs operating in India. The results show that the level of average cost, revenue and profit inefficiency in PSBs is 4.3%, 2.5% and 12.1%, respectively. State Bank of Hyderabad, IDBI, Oriental Bank of Commerce, Corporation Bank, Indian Bank and State Bank of India are quite efficient ones as suggested by the individual performances of these banks. It is suggested that PSBs should take active steps to control NPAs and also bring technological up gradation. Government too should provide them a free hand in their working.

Keywords: cost efficiency; revenue efficiency; profit efficiency; PSBs; public sector banks; DEA; data envelopment analysis; India; banking industry; bank performance.

DOI: 10.1504/IJBAF.2015.075338

International Journal of Behavioural Accounting and Finance, 2015 Vol.5 No.3/4, pp.298 - 313

Received: 04 Aug 2015
Accepted: 21 Oct 2015
Published online: 15 Mar 2016 *

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