Assessing efficiency of private sector banks in India: an empirical investigation using DEA

Management and Labour Studies

Biswas

2022

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Financial services actively contribute to the economic development of society. This leads to social safety that protects people from economic shocks. The present study seeks to ascertain whether cycle rickshaw pullers of West Bengal have bank accounts and to also investigate if bank account awareness among cycle rickshaw pullers are affected by different socio-economic factors. The study has been conducted on 170 rickshaw pullers who belong to the poor and marginalized sections of society. The study uses logistic regression to estimate important factors that influence the opening of a bank account. The goodness of fit of the model is checked in terms of the Hosmer–Lemeshow test. A large percentage of this group of rickshaw pullers is excluded from banking services. Among the 10 explanatory variables, the study finds that the number of years pulling cycle rickshaws, the monthly income and social participation are the factors that significantly influence the opening of a bank account. It has been observed that the respondents have meager incomes, low levels of health care and personal well-being, lives entrapped in poverty and are, on the whole, excluded from the mainstream. To include them in the mainstream financial services, the study suggests valid recommendations to draw the attention of the regulators and banks towards financial inclusion. JEL Codes: G21, G29

Section: Dependent Variablementioning

confidence: 99%

Financial Inclusion Through Banking for the Poor: A Study on Cycle Rickshaw Pullers in West Bengal

Management and Labour Studies

Biswas

2022

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“…Further, Burgstaller (2013) has measured efficiency in the regional banking market through DEA with three inputs and three output variables. In another study, Maity and Sahu (2018b) have measured the comparative efficiency of PSBs and PVBs toward financial inclusion. Using DEA, the study reveals that four banks were efficient under Charnes, Cooper and Rhodes (CCR) and 10 banks are efficient under Banker, Charnes and Cooper (BCC) model.…”

Section: Review Of Literaturementioning

confidence: 99%

“…By considering branch as a supply-side dimension of financial inclusion, the present study has considered branch as an output variable. The previous studies by Saha and Ravisankar (2000), Maity and Sahu (2017) and Maity and Sahu (2018b) have considered bank branch as an input variable.…”

Section: Efficiency Of Indian Banking Sectormentioning

confidence: 99%

“…When the banking system fails, the whole of a nations' payments system is in jeopardy, as all the sectors rely on banks for financing. From the customers' side, only efficient banks can offer better services due to their reasonable operational cost, and only then the regulator can achieve Efficiency of Indian banking sector the target of financial inclusion (Maity and Sahu, 2018b). Efficient banks are better able to compete because of their marginal operational costs.…”

Section: Introductionmentioning

confidence: 99%

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How far the Indian banking sectors are efficient?: An empirical investigation

2021

AJEB

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PurposeBank mobilizes savings and transforms it into credit for investments in various sectors, which helps the economy running. The purpose of this paper is to examine the efficiency of three bank groups in India with data spanning from 2009–2010 to 2018–2019.Design/methodology/approachThe study uses data envelopment analysis for measuring the efficiency of the selected banks. It measures the efficiency both from the revenue dimension and from the supply-side dimension of financial inclusion.FindingsThe study finds that foreign banks on average are working efficiently far better than the public-sector and private-sector banks. It indicates that foreign banks in India are operating at 92.53% efficiency level, whereas private- and public-sector banks are operating at 90.20 and 86.04% efficiency levels, respectively. Further, the result of the Friedman test reveals that there is no significant difference in efficiency scores amongst these three bank groups. As major challenges, non-performing assets of the banking industry to be reduced by 15% as radial and 53.18% as slack.Originality/valueOne of the notable innovativeness of this study is that, unlike most of the previous studies that are mostly selected few banks and specific group, the present study may place itself as a unique inquiry in the domain of technical efficiency in macro concept by considering three major bank groups operating in India. An important contribution of the study is the classification of reasons behind the inefficiency, i.e. managerial or inappropriate scale size and further projections of input factors for the same level of output.

“…This technique has been used widely to measure efficiency not only in the private sector but also in the public sector. Maity and Sahu (2018) have examined the role of Indian banks in financial inclusion and measure their efficiency through DEA in financial inclusion respect. Results indicate that scheduled commercial banks (SCBs) are using 94.87% of RAMJ 14,2 resources to produce desired outputs concerning financial inclusion.…”

Section: Literature Reviewmentioning

confidence: 99%

Role of public sector banks towards financial inclusion during pre and post introduction of PMJDY: a study on efficiency review

2020

RAMJ

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Purpose An inclusive financial system is essential to develop the country’s economy. A massive shift in financial inclusion was observed by the initiative of government to include financially excluded into the formal financial system by launching Pradhan Mantri Jan Dhan Yojana (PMJDY) in 2014. This paper aims to attempt to examine the efficiency of public sector banks in financial inclusion during pre and post introduction of PMJDY. Design/methodology/approach The data envelopment analysis is used to measure the efficiency of the banks towards financial inclusion for the periods, 2010–2011 to 2013–2014 as pre-introduction and 2014–2015 to 2017–2018 as post-introduction phase. For this study, supply-side parameters of financial inclusion considered as input variables and demand-side parameters as output variables. Findings The study finds that overall average efficiency towards financial inclusion increases significantly during post-phase, though all the public sector banks are not performing equally. There is a significant variation in efficiency level between them and even between the two periods. Further, there is a huge opportunity to enhance technical efficiency with the same quantity of input which will help to achieve the target of financial inclusion. Originality/value A comparative study between the two phases has taken place to analyse the impact of the scheme on the technical efficiency of banks. One of the notable innovativeness of this study is that, unlike most of the previous studies which are mostly theoretical and conceptual, the present study may place itself as a unique inquiry in the domain of efficiency review of public sector banks during pre and post introduction of PMJDY.