Measuring Efficiency of Indian Banks Using Window DEA Analysis
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This chapter aims at measuring the efficiency of Indian banks in the liberal era. It also attempts to unearth the reasons behind the divergence in efficiency scores among different categories of banks and across time. The study uses nonparametric window DEA or estimating efficiency scores of 59 Indian banks over the period 1992–2012. The window DEA model helps understand the panel data features present in efficiency score. The entire time period is broken into 19 windows (1992–94, 1993–95,…, 2010–12) to carry out the window DEA analysis. The study finds that the public sector banks performed relatively better in terms of efficiency. The performance of the foreign banks and the old private sector banks has been relatively worse. From the pattern of changes in the efficiency scores across windows, a decline in the efficiency score in the banking sector during the period 2000–2004 is seen. In early 2000s, Indian banking sector witnessed several changes related to technology adoption and banking market operations. In the dynamic situation of expanding new possibilities, Indian banks took the necessary time to adjust themselves to the changed scenario.
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