EFFICIENCY MEASUREMENT OF SCHEDULED COMMERCIAL BANKS STATE-WISE: A REGIONAL ANALYSIS

One of the principal goals of the Indian banking sector reforms was to enhance the efficiency of the banking industry. This article contributes to the banking efficiency literature by measuring the technical efficiency of scheduled commercial banks at the state level. This study estimates the technical efficiency of scheduled commercial banks (SCBs) at the state level for a time span of fifteen years using data envelopment analysis (DEA). Data for the same is obtained from the RBI website from 1996-97 to 2010-11. It is found that technical efficiencies of different states are different during different time periods indicating that some states are prompt, while, other states are slow in adopting the banking reforms. Super efficiency estimated for each state year-wise reveals that Uttar Pradesh is the leading state rank wise followed by Maharashtra, Rajasthan, and Gujarat. While the comparison of the rank of states with the gross state domestic product indicates that the states with higher banking efficiency are better in development.