Indian Banks Total Factor Productivity Change: Do Ownership, Size and Regulation Matter?

This paper examines the impact of the ownership, size and regulation on productivity change by employing the non-parametric method of DEA (Malmquist Productivity Index) in the Indian banking sector over the period 1992–2010. The results indicate that Indian banking sector exhibited productivity regress in the initial reform period (1992–1998) irrespective of the ownership type and size group. However, there was a marginal productivity improvement for full sample (1992–2010) period and post reform (1999–2010) period. Total factor productivity change was mainly due to improvement in technical change rather than improvement in efficiency change irrespective of the regulatory regime, ownership type and size group. The decomposition of the efficiency change index into its pure technical and scale efficiency components suggest that the increase in Indian banks’ efficiency was inconclusive.