Market Concentration and Efficiency of Indian Commercial Banks
American Journal of Theoretical and Applied Business
Volume 3, Issue 1, March 2017, Pages: 1-10
Received: Mar. 6, 2017; Accepted: May 2, 2017; Published: May 22, 2017
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Authors
Jayachitra Thiruvaiyaru Anantharaman, Project Fellow (ICSSR), Department of Economics, Avinashilingam Institute for Home Science and Higher Education for Women, Coimbatore, India
Kallanmarthodi Geetha, Department of Economics, Avinashilingam Institute for Home Science and Higher Education for Women, Coimbatore, India
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Abstract
The Indian banking industry is going through a period of intense change, where liberalized business environment has affected the banking business by way of increasing competition, rising customer expectations, shrinking spreads and increasing disintermediation. Ongoing changes in the structure of Indian banking are clearly visible. This paper investigates the levels and determinants of efficiency of schedule commercial banks of this vital sector of the Indian economy by using firm-level data. For this purpose, a two stage data envelopment analysis has been used. In the first stage, super technical efficiency analysis of 89 sample firms has been undertaken. This study specifies two outputs: total loans and other earning assets and three inputs: labour, fixed capital and total customers and short term funding and the prices are personnel expenses to average number of personnel for labour, total capital expenses to total fixed assets for fixed capital and interest expenses to average total customers and short term funding for the years 1980–81 to 2012–13. In the second stage, the efficiency scores obtained from the first stage are regressed on external environmental factors like fiscal deficits, private investment and the share of foreign banks using a censored regression model, viz. Tobit model. In this context, the term environment is used to describe factors that could influence the efficiency of a firm, where such factors are not traditional inputs and are not under the control of management (17). The results confirm that the varying market condition and the presence of foreign banks will contribute positively to economic growth.
Keywords
Bank Efficiency, Schedule Commercial Banks, DEA Models
To cite this article
Jayachitra Thiruvaiyaru Anantharaman, Kallanmarthodi Geetha, Market Concentration and Efficiency of Indian Commercial Banks, American Journal of Theoretical and Applied Business. Vol. 3, No. 1, 2017, pp. 1-10. doi: 10.11648/j.ajtab.20170301.11
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Copyright © 2017 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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