Malmquist TFP Growth in Nationalised Banks in India

Abstract

Banking is an important segment of the tertia,y sector and acts as the back bone of economic progress. Banking is the fulcrum of our economy. This paper is a modest effort to evaluate the changes in the Total Factor Productivity (TFP) of 19 Nationalised banks/or the post reform period o/2005-06 to 2010-11. TFP indices are estimated using Malmquist productivity index_ approach through Data Envelopment Analysis. Total Factor Productivity change indices are product of technical efficiency change and technical change. The technical efficiency change isfurther decompos.:d into pure efficiency change and scale efficiency change. The results reveal that, on an average, the TFP growth is more due lo technical efficiency change than technical change. The analysis reveals that during the study period the Nationalised banks have experienced regressed technical efficiency change as well as technical change.