Market Concentration and Efficiency of Indian Commercial Banks

Jayachitra Thiruvaiyaru Anantharaman; Kallanmarthodi Geetha

doi:doi:10.11648/j.ajtab.20170301.11

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Market Concentration and Efficiency of Indian Commercial Banks

Jayachitra Thiruvaiyaru Anantharaman, Kallanmarthodi Geetha

Published in American Journal of Theoretical and Applied Business (Volume 3, Issue 1)

Received: 6 March 2017 Accepted: 2 May 2017 Published: 22 May 2017

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Abstract

The Indian banking industry is going through a period of intense change, where liberalized business environment has affected the banking business by way of increasing competition, rising customer expectations, shrinking spreads and increasing disintermediation. Ongoing changes in the structure of Indian banking are clearly visible. This paper investigates the levels and determinants of efficiency of schedule commercial banks of this vital sector of the Indian economy by using firm-level data. For this purpose, a two stage data envelopment analysis has been used. In the first stage, super technical efficiency analysis of 89 sample firms has been undertaken. This study specifies two outputs: total loans and other earning assets and three inputs: labour, fixed capital and total customers and short term funding and the prices are personnel expenses to average number of personnel for labour, total capital expenses to total fixed assets for fixed capital and interest expenses to average total customers and short term funding for the years 1980–81 to 2012–13. In the second stage, the efficiency scores obtained from the first stage are regressed on external environmental factors like fiscal deficits, private investment and the share of foreign banks using a censored regression model, viz. Tobit model. In this context, the term environment is used to describe factors that could influence the efficiency of a firm, where such factors are not traditional inputs and are not under the control of management (17). The results confirm that the varying market condition and the presence of foreign banks will contribute positively to economic growth.

Published in	American Journal of Theoretical and Applied Business (Volume 3, Issue 1)
DOI	10.11648/j.ajtab.20170301.11
Page(s)	1-10
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Bank Efficiency, Schedule Commercial Banks, DEA Models

References

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Jayachitra Thiruvaiyaru Anantharaman, Kallanmarthodi Geetha. (2017). Market Concentration and Efficiency of Indian Commercial Banks. American Journal of Theoretical and Applied Business, 3(1), 1-10. https://doi.org/10.11648/j.ajtab.20170301.11

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Jayachitra Thiruvaiyaru Anantharaman; Kallanmarthodi Geetha. Market Concentration and Efficiency of Indian Commercial Banks. Am. J. Theor. Appl. Bus. 2017, 3(1), 1-10. doi: 10.11648/j.ajtab.20170301.11

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AMA Style

Jayachitra Thiruvaiyaru Anantharaman, Kallanmarthodi Geetha. Market Concentration and Efficiency of Indian Commercial Banks. Am J Theor Appl Bus. 2017;3(1):1-10. doi: 10.11648/j.ajtab.20170301.11

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@article{10.11648/j.ajtab.20170301.11,
  author = {Jayachitra Thiruvaiyaru Anantharaman and Kallanmarthodi Geetha},
  title = {Market Concentration and Efficiency of Indian Commercial Banks},
  journal = {American Journal of Theoretical and Applied Business},
  volume = {3},
  number = {1},
  pages = {1-10},
  doi = {10.11648/j.ajtab.20170301.11},
  url = {https://doi.org/10.11648/j.ajtab.20170301.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajtab.20170301.11},
  abstract = {The Indian banking industry is going through a period of intense change, where liberalized business environment has affected the banking business by way of increasing competition, rising customer expectations, shrinking spreads and increasing disintermediation. Ongoing changes in the structure of Indian banking are clearly visible. This paper investigates the levels and determinants of efficiency of schedule commercial banks of this vital sector of the Indian economy by using firm-level data. For this purpose, a two stage data envelopment analysis has been used. In the first stage, super technical efficiency analysis of 89 sample firms has been undertaken. This study specifies two outputs: total loans and other earning assets and three inputs: labour, fixed capital and total customers and short term funding and the prices are personnel expenses to average number of personnel for labour, total capital expenses to total fixed assets for fixed capital and interest expenses to average total customers and short term funding for the years 1980–81 to 2012–13. In the second stage, the efficiency scores obtained from the first stage are regressed on external environmental factors like fiscal deficits, private investment and the share of foreign banks using a censored regression model, viz. Tobit model. In this context, the term environment is used to describe factors that could influence the efficiency of a firm, where such factors are not traditional inputs and are not under the control of management (17). The results confirm that the varying market condition and the presence of foreign banks will contribute positively to economic growth.},
 year = {2017}
}

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TY  - JOUR
T1  - Market Concentration and Efficiency of Indian Commercial Banks
AU  - Jayachitra Thiruvaiyaru Anantharaman
AU  - Kallanmarthodi Geetha
Y1  - 2017/05/22
PY  - 2017
N1  - https://doi.org/10.11648/j.ajtab.20170301.11
DO  - 10.11648/j.ajtab.20170301.11
T2  - American Journal of Theoretical and Applied Business
JF  - American Journal of Theoretical and Applied Business
JO  - American Journal of Theoretical and Applied Business
SP  - 1
EP  - 10
PB  - Science Publishing Group
SN  - 2469-7842
UR  - https://doi.org/10.11648/j.ajtab.20170301.11
AB  - The Indian banking industry is going through a period of intense change, where liberalized business environment has affected the banking business by way of increasing competition, rising customer expectations, shrinking spreads and increasing disintermediation. Ongoing changes in the structure of Indian banking are clearly visible. This paper investigates the levels and determinants of efficiency of schedule commercial banks of this vital sector of the Indian economy by using firm-level data. For this purpose, a two stage data envelopment analysis has been used. In the first stage, super technical efficiency analysis of 89 sample firms has been undertaken. This study specifies two outputs: total loans and other earning assets and three inputs: labour, fixed capital and total customers and short term funding and the prices are personnel expenses to average number of personnel for labour, total capital expenses to total fixed assets for fixed capital and interest expenses to average total customers and short term funding for the years 1980–81 to 2012–13. In the second stage, the efficiency scores obtained from the first stage are regressed on external environmental factors like fiscal deficits, private investment and the share of foreign banks using a censored regression model, viz. Tobit model. In this context, the term environment is used to describe factors that could influence the efficiency of a firm, where such factors are not traditional inputs and are not under the control of management (17). The results confirm that the varying market condition and the presence of foreign banks will contribute positively to economic growth.
VL  - 3
IS  - 1
ER  -

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Author Information

Jayachitra Thiruvaiyaru Anantharaman

Project Fellow (ICSSR), Department of Economics, Avinashilingam Institute for Home Science and Higher Education for Women, Coimbatore, India
Kallanmarthodi Geetha

Department of Economics, Avinashilingam Institute for Home Science and Higher Education for Women, Coimbatore, India

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Jayachitra Thiruvaiyaru Anantharaman, Kallanmarthodi Geetha. (2017). Market Concentration and Efficiency of Indian Commercial Banks. American Journal of Theoretical and Applied Business, 3(1), 1-10. https://doi.org/10.11648/j.ajtab.20170301.11

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ACS Style

Jayachitra Thiruvaiyaru Anantharaman; Kallanmarthodi Geetha. Market Concentration and Efficiency of Indian Commercial Banks. Am. J. Theor. Appl. Bus. 2017, 3(1), 1-10. doi: 10.11648/j.ajtab.20170301.11

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AMA Style

Jayachitra Thiruvaiyaru Anantharaman, Kallanmarthodi Geetha. Market Concentration and Efficiency of Indian Commercial Banks. Am J Theor Appl Bus. 2017;3(1):1-10. doi: 10.11648/j.ajtab.20170301.11

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@article{10.11648/j.ajtab.20170301.11,
  author = {Jayachitra Thiruvaiyaru Anantharaman and Kallanmarthodi Geetha},
  title = {Market Concentration and Efficiency of Indian Commercial Banks},
  journal = {American Journal of Theoretical and Applied Business},
  volume = {3},
  number = {1},
  pages = {1-10},
  doi = {10.11648/j.ajtab.20170301.11},
  url = {https://doi.org/10.11648/j.ajtab.20170301.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajtab.20170301.11},
  abstract = {The Indian banking industry is going through a period of intense change, where liberalized business environment has affected the banking business by way of increasing competition, rising customer expectations, shrinking spreads and increasing disintermediation. Ongoing changes in the structure of Indian banking are clearly visible. This paper investigates the levels and determinants of efficiency of schedule commercial banks of this vital sector of the Indian economy by using firm-level data. For this purpose, a two stage data envelopment analysis has been used. In the first stage, super technical efficiency analysis of 89 sample firms has been undertaken. This study specifies two outputs: total loans and other earning assets and three inputs: labour, fixed capital and total customers and short term funding and the prices are personnel expenses to average number of personnel for labour, total capital expenses to total fixed assets for fixed capital and interest expenses to average total customers and short term funding for the years 1980–81 to 2012–13. In the second stage, the efficiency scores obtained from the first stage are regressed on external environmental factors like fiscal deficits, private investment and the share of foreign banks using a censored regression model, viz. Tobit model. In this context, the term environment is used to describe factors that could influence the efficiency of a firm, where such factors are not traditional inputs and are not under the control of management (17). The results confirm that the varying market condition and the presence of foreign banks will contribute positively to economic growth.},
 year = {2017}
}

Copy | Download

TY  - JOUR
T1  - Market Concentration and Efficiency of Indian Commercial Banks
AU  - Jayachitra Thiruvaiyaru Anantharaman
AU  - Kallanmarthodi Geetha
Y1  - 2017/05/22
PY  - 2017
N1  - https://doi.org/10.11648/j.ajtab.20170301.11
DO  - 10.11648/j.ajtab.20170301.11
T2  - American Journal of Theoretical and Applied Business
JF  - American Journal of Theoretical and Applied Business
JO  - American Journal of Theoretical and Applied Business
SP  - 1
EP  - 10
PB  - Science Publishing Group
SN  - 2469-7842
UR  - https://doi.org/10.11648/j.ajtab.20170301.11
AB  - The Indian banking industry is going through a period of intense change, where liberalized business environment has affected the banking business by way of increasing competition, rising customer expectations, shrinking spreads and increasing disintermediation. Ongoing changes in the structure of Indian banking are clearly visible. This paper investigates the levels and determinants of efficiency of schedule commercial banks of this vital sector of the Indian economy by using firm-level data. For this purpose, a two stage data envelopment analysis has been used. In the first stage, super technical efficiency analysis of 89 sample firms has been undertaken. This study specifies two outputs: total loans and other earning assets and three inputs: labour, fixed capital and total customers and short term funding and the prices are personnel expenses to average number of personnel for labour, total capital expenses to total fixed assets for fixed capital and interest expenses to average total customers and short term funding for the years 1980–81 to 2012–13. In the second stage, the efficiency scores obtained from the first stage are regressed on external environmental factors like fiscal deficits, private investment and the share of foreign banks using a censored regression model, viz. Tobit model. In this context, the term environment is used to describe factors that could influence the efficiency of a firm, where such factors are not traditional inputs and are not under the control of management (17). The results confirm that the varying market condition and the presence of foreign banks will contribute positively to economic growth.
VL  - 3
IS  - 1
ER  -

Copy | Download