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Relevance of Non-traditional Activities on the Efficiency of Indian Banks

  • Sunil Kumar
  • Rachita Gulati
Chapter
Part of the India Studies in Business and Economics book series (ISBE)

Abstract

This chapter investigates the relevance of the inclusion of non-traditional activities in the specification of banks’ output on the efficiency of Indian banks. The empirical results indicate that the exclusion of non-traditional activities not only understates the cost, technical and allocative efficiencies of individual banks, but also affects the ranking of ownership groups in the industry. In particular, when a proxy for non-traditional activities is accounted for in the output specification, the foreign banks appear to be more efficient than public and private sector banks. Overall, the results reinforce the prevailing view in the extant literature that the exclusion of non-traditional activities causes misspecification of banks’ output, and may distort the efficiency estimates.

Keywords

Data Envelopment Analysis Efficiency Score Data Envelopment Analysis Model Private Bank Allocative Efficiency 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer India 2014

Authors and Affiliations

  • Sunil Kumar
    • 1
  • Rachita Gulati
    • 2
  1. 1.Faculty of EconomicsSouth Asian UniversityNew DelhiIndia
  2. 2.Department of Humanities and Social SciencesIndian Institute of Technology RoorkeeRoorkeeIndia

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