Comparative Performance based on Components of Technical Efficiency of Commercial Banks in India

Abstract

This paper aims to measure and compare the Technical Efficiency (TE) of major public sector and private sector banks operating in India from 2013 to 2024. The paper evaluates the technical efficiency, Pure Technical Efficiency (PTE), and Scale Efficiency (SE) of ten public sector banks and ten private sector banks operating in India within the period. Data envelopment analysis (DEA) has been used to calculate the TE. BCC Input Oriented approach has been used to measure the PTE and SE. It is revealed from the DEA results that during the covered years the mean efficiency of overall banks under study was 0.864. The most efficient bank with a maximum mean efficiency score of 0.950 was Bank of India and the bank with a minimum mean efficiency score of 0.70 was Indus Ind Bank. Further when we compared the mean efficiency score of public sector banks (0.901) and private sector banks (0.826). It reveals that the public sector banks were more efficient than the private sector banks under the study. The results suggest that the overall low efficiency of banks under study is due to pure technical efficiency rather than scale efficiency.