Profit efficiency and determinants of Indian banks; A truncated bootstrap and data envelopment analysis

Singh, P.; Thaker, Keyur B.

doi:10.1080/23322039.2020.1724242

Cited by 14 publications

(12 citation statements)

References 73 publications

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“…The results show that large public, private, and foreign banks are more efficient than small and medium-sized banks. Ownership structure is a significant determinant of efficiency [26]. Our results show that foreign banks outperform their domestic competitors, with bank size and profitability being the main drivers [27].…”

Section: Agency Theorymentioning

confidence: 67%

The Effect of Fintech on Conventional Bank Performance and Bank Risk

Harmadi¹,

Untoro²,

Trinugroho³

et al. 2022

Advances in Economics, Business and Management Research

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Fintech in Indonesia is growing very rapidly, this is also very interesting for researchers. This study looks at the effect of Fintech on the performance and risk of conventional banks in Indonesia. The proxy for fintech in this study is P2P lending and the adoption of fintech technology by banks. The number of conventional banks in Indonesia is 107 banks, and this study took a sample of 81 conventional banks. This research period is for 5 years from 2017 to 2021. The results show that P2P lending and fintech adoption do not affect the performance or risk of conventional banks. However, what is interesting about the results of this study is that the interaction between each independent variable with the moderating variable of bank ownership structure shows the results of the influence of the independent variable on the dependent variable which is significant. We find that bank ownership structure is proven to strengthen the effect of P2P lending and fintech adoption on bank risk, while the effect on performance is not significant. We found that the presence of P2P lending will increase the risk of conventional banks. While the effect of fintech adoption shows a lowering effect on bank risk, especially those owned by cooperatives. Our findings support previous research results that the presence of P2P lending will increase bank risk, and the adoption of fintech will decrease risk.

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Section: Agency Theorymentioning

confidence: 67%

The Effect of Fintech on Conventional Bank Performance and Bank Risk

Harmadi¹,

Untoro²,

Trinugroho³

et al. 2022

Advances in Economics, Business and Management Research

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“…To solve this problem, some scholars developed profit efficiency to evaluate bank performance. For example, Singh and Thaker (2020) used DEA to estimate profit efficiency for small, medium, and large Indian banks with varying ownership types. Chen et al (2020) incorporated risk factors into the Nerlovian profit efficiency to develop a risk-based profit efficiency, showing that the profit loss of Chinese city banks is mainly attributable to allocative inefficiency.…”

Section: Bank Performance Evaluationmentioning

confidence: 99%

A two-step profit efficiency evaluation method based on predicted performance, with an application to Chinese commercial banks

Liu

Zhou

2022

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PurposeThe purpose of this study is to evaluate the profit efficiency of decision-making units (DMUs) based on predicted future information to solve the lag problem of improvement benchmarks given by the traditional profit efficiency model.Design/methodology/approachThis paper proposes a two-step profit efficiency evaluation method. The first step predicts the future input and output information of DMUs through the past time-series data, obtaining a likely production possibility set (PPS) and profit frontier for the next period. The second step calculates DMUs' profit efficiency based on the predictions obtained in the first step and provides predictive benchmarking for DMUs.FindingsThe empirical results show that the proposed method yields good solutions for the lag problem of benchmarks given in ex-post evaluation, enabling bank managers to use predicted future information to achieve better improvement. Besides, compared with the technical efficiency measure, profit efficiency can better reflect the financial situation of DMUs and give the specific gap between the evaluated and optimal DMU.Practical implicationsFor bank managers, the authors' new technique is advantageous for grasping the initiative of development because this technique accounts for the future development of the whole industry and sets forward-looking targets. These advantages can help banks improve in a more favorable direction and improve the asset management ability of banks.Originality/valueThis paper combines the data envelopment analysis (DEA) profit efficiency model with performance prediction and proposes a new two-step profit efficiency model, filling a gap in previous studies.

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“…The excess of it is reported as inefficiency. Based on the problem identification and relevant literature(s), as surveyed on operational performance of banking system (Avkiran, 2011;Hafsal et al, 2020;Kumar & Gulati, 2017;Sahoo & Tone, 2009;Singh & Thaker, 2020;Vidyarthi & Tiwari, 2019;Zha et al, 2016), the following variables are identified:…”

Section: Data Source and Variable Selectionmentioning

confidence: 99%

Application of Hybrid Approach in Banking System: An Undesirable Operational Performance Modelling

PREETI

Roy

2021

Global Business Review

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Non-performing loans (NPLs) is a critical constituent that impacts the operational performance of banks. Rising level of risk leads to poor operational performance, especially when it is beyond the bank’s capabilities to control the increasing bad assets. This calls for real-time performance assessment coupled with futuristic decision making to support banking managers. This observation motivates the authors of this article to develop a two-stage performance prediction assessment model. Accordingly, a hybrid approach combining data envelopment analysis (DEA) and artificial neural network (ANN) is developed to measure and predict the operational efficiency scores of banks. DEA effectively explores the operational performance as well as improvable areas of inefficient banks. The training of ANN model is dependent on estimated operational DEA efficiency scores with the objective to estimate the efficiency scores. Domain for the validation of this study includes dataset derived from Indian banks. The validation result shows that trained ANN model has the prediction capacity with minimum error and maximum accuracy. Finally, the outcome of this study is significantly directed towards business managers who can rely on predictions based on empirical findings of this proposed hybrid modelling.

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Profit efficiency and determinants of Indian banks; A truncated bootstrap and data envelopment analysis

Cited by 14 publications

References 73 publications

The Effect of Fintech on Conventional Bank Performance and Bank Risk

The Effect of Fintech on Conventional Bank Performance and Bank Risk

A two-step profit efficiency evaluation method based on predicted performance, with an application to Chinese commercial banks

Application of Hybrid Approach in Banking System: An Undesirable Operational Performance Modelling

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