Document Type
Article
Abstract
This paper examines the effects of cost, revenue, profit efficiency, and stability inefficiency on bank profitability in India over the period 1997 to 2017. Additionally, this study examines the effect of efficiency on profitability for banks according to their ownership and for periods with (and without) the global financial crisis. The cost, revenue, and profit efficiency scores for 70 banks in India are estimated using stochastic frontier analysis. Our key findings are as follows. First, we find that cost, revenue and profit efficiencies positively influence the profitability conditions of Indian banks. Second, banks that are inefficient adversely influence bank performance, although the global financial crisis did not seem to impact the efficiency-profitability relationship. Finally, we find that bank ownership matters for the association between its efficiency and performance.
Recommended Citation
Rakshit, Bijoy and Bardhan, Samaresh
(2022)
"DOES BANK EFFICIENCY ENHANCE BANK PERFORMANCE? EMPIRICAL EVIDENCE FROM INDIAN BANKING,"
Bulletin of Monetary Economics and Banking: Vol. 25:
No.
0, Article 8.
DOI: https://doi.org/10.21098/bemp.v25i0.1844
Available at:
https://bulletin.bmeb-bi.org/bmeb/vol25/iss0/8
First Page
103
Last Page
124
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Country
India
Affiliation
Indian Institute of Technology Ropar, India Department
