Analysis of Total Factor Productivity Change among Indian Commercial Banks Using Fare–Primont Index

The present study attempts to analyze the performance of commercial banks in India during 1991–2009 using Fare-Primont productivity index. The performance of the selected banks is evaluated in terms of efficiency and productivity change after economic reform period. The Fare-Primont index captures the overall change in productivity and decomposes it into various measures of efficiency change. The finding of the study indicates that there has been a declining trend in case of the mean value of total factor productivity change throughout the study period. The study further indicates that there has been progress in technical change but in context of efficiency change component we find that on an average efficiency for the banks in this sector has regressed. On a whole, this implies that while technological innovation has offered new production opportunities for the sector a large chunk of banks have failed to appropriate the benefit of technological innovation.