Efficiency and Productivity Growth in Indian Banking

This article attempts to examine technical efficiency and productivity performance of Indian scheduled commercial banks, for the period 1979-2008. We model a multiple output/multiple input technology production frontier using semi-parametric estimation methods. The endogeneity of multiple outputs is addressed by semi-parametric estimates in part by introducing multivariate kernel estimators for the joint distribution of the multiple outputs and correlated random effects. Output is measured as the rupee value of total loans and total investments at the end of the year. The estimates provide robust inferences about the productivity and efficiency gains due to economic reforms.