Cost, revenue and profit efficiency analysis of Indian scheduled commercial banks

2017 ◽  
Vol 59 (3) ◽  
pp. 442-462 ◽  
Author(s):  
Megha Mahendru ◽  
Aparna Bhatia
Keyword(s):  
Public Sector ◽  
Commercial Banks ◽  
Empirical Work ◽  
Specific Reference ◽  
Profit Efficiency ◽  
Content Type ◽  
Output Synchronization ◽  
Efficiency Performance ◽  
Private And Public ◽  
The Cost

Purpose This paper aims to analyze the cost, revenue and profit efficiency performance of Indian scheduled commercial banks. The study also determines differences if any related to efficiency among banks on the basis of ownership pattern. Design/methodology/approach Cost, revenue and profit efficiency of banks is calculated by using the non-parametric approach, namely, data envelopment analysis. Further, the differences in the efficiency scores are examined by applying analysis of variance. Findings Indian scheduled commercial banks have not been able to maintain their input-output synchronization in terms of cost, revenue and profits in the year 2012-2013. Foreign sector banks have higher cost and profit efficiency as compared to their counterparts in private and public sector, whereas public sector banks are found to have been more revenue efficient. Originality/value With specific reference to India, less empirical work has been carried out with respect to cost, revenue and profit efficiency. None of the studies have evaluated the sector-wise performance of banks in terms of all three efficiency parameters.

Revenue efficiency analysis of scheduled commercial banks in a dynamic environment

2015 ◽  
Vol 8 (2) ◽  
pp. 184-210 ◽  
Author(s):  
Aparna Bhatia ◽  
Megha Mahendru
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Allocative Efficiency ◽  
Empirical Work ◽  
Dynamic Environment ◽  
Specific Reference ◽  
Content Type ◽  
Customer Base ◽  
Public Sector Banks ◽  
Revenue Efficiency

Purpose – The paper aims to analyze the revenue efficiency (RE) of Scheduled Commercial Banks in India. The study also determines the nature of Return to Scale (RTS) of banks and thereby identifies the leaders and laggards in the Indian Banking Sector. Design/methodology/approach – RE of banks is calculated by using the non-parametric approach, namely, data envelopment analysis. Further, the efficiency scores are decomposed into technical and allocative efficiency. Findings – Public Sector Banks have higher RE as compared to their counterparts in private and foreign sectors. The choice of operating on incorrect scale is identified as the primary reason of inefficiency. It is suggested that banks should expand their business by opening new branches and also try to increase their customer base. Overall, it is seen that trends in RE are somewhat affected by the dynamism in the environment along with the bank-specific factors. Originality/value – With specific reference to India, less empirical work has been carried out with respect to RE. None of the studies has identified that revenue inefficiency is caused either by mispricing of outputs or giving wrong choice of outputs.

Assessment of revenue efficiency of Indian scheduled commercial banks

2018 ◽  
Vol 60 (6) ◽  
pp. 1234-1254
Author(s):  
Aparna Bhatia ◽  
Megha Mahendru
Keyword(s):  
Commercial Banks ◽  
Design Methodology ◽  
Empirical Work ◽  
Specific Reference ◽  
Data Envelopment ◽  
Parametric Approach ◽  
Tobit Regression ◽  
Content Type ◽  
Revenue Efficiency ◽  
Better Than

Purpose This paper aims to endeavour to assess revenue efficiency (RE) scores of Scheduled Commercial Banks operating in India. Differences in RE are studied across varying ownership as well. The study also determines the nature of return to scale of Indian SCBs as whole as well as classified across ownership. Number of banks operating as leaders and laggards has also been calculated. Design/methodology/approach RE of banks is calculated by using the non-parametric approach, namely, data envelopment analysis (DEA). Further, the differences in the efficiency scores are examined by applying Panel Tobit Regression. Findings The results of DEA suggest that none of the banks has ever achieved full RE score of 1 in any of the years under study. An inconsistent pattern of RE is seen. Private sector banks have performed better than their counterparts in public and foreign sector. Maximum number of banks operating on decreasing return to scale are from public sector, and the highest number of banks operating on constant return to scale belong to Foreign Sector. More number of banks operates as laggards in the Indian financial system. Thus, there still exists room for improvement for banks in all sectors. Originality/value With specific reference to India, less empirical work has been carried out with respect to RE. As only two studies so far from the literature are available that consider RE exclusively, namely, Ram Mohan and Ray (2004) and Bhatia and Mahendru (2015). However, Ram Mohan and Ray (2004) considered only the reformatory phase, whereas Bhatia and Mahendru (2015) analyzed the performance for specific points of time only. None of the study has been able to give any concrete findings according to sector-wise performance of banks in terms of RE parameters.

scholarly journals A meta-crisis banking efficiency study in the MENA region

2020 ◽  
Vol 11 (9) ◽  
pp. 2087-2112
Author(s):  
Ioannis Anagnostopoulos ◽  
Emmanouil Noikokyris ◽  
George Giannopoulos
Keyword(s):  
Empirical Work ◽  
Efficiency Index ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Gulf Region ◽  
Bank Efficiency ◽  
Content Type ◽  
Conventional Banks ◽  
The Cost ◽  
Revenue Efficiency

Purpose The purpose of this paper is to comparatively examine the cost and the overlooked revenue efficiency of Islamic and commercial banks in the aftermath of the crisis, operating in nine MENA-based countries during the 2010-2017 financial period, where the established empirical work is relatively limited. The authors also update the research where they use recent data sets and they provide for a targeted, structured literature review pre- and post-crisis in the Gulf region. Design/methodology/approach The authors examine cost and revenue efficiency of 25 major Islamic banks (IBs) and 25 major conventional banks (CBs). They conduct tests on the determinants of such variables. In the first stage of the analysis, they measure efficiency by using the data envelopment analysis (DEA) technique. The analysis performs regressions where these also reveal that the bank efficiency index is influenced by various bank type-specific attributes. It also seems that tighter restrictions on bank activities are negatively associated with bank efficiency. Second stage analysis, which accounts for banking environment and bank-level characteristics, confirms these results. Findings Conventional banks are both more cost and revenue efficient than Islamic banks over the period under examination. The analysis also reveals that the bank efficiency index is influenced by bank-type attributes. Greater presence of fixed capital resources has positive effects on growth in both Islamic and conventional banking. The major constraints impeding Islamic banking growth include labour costs. The authors examine whether and how bank-type orientation affects the cost and revenue efficiency of conventional and Islamic banks. They find that post-crisis Islamic banks underperform their conventional counterparts on both accounts within a mixed banking system. Research limitations/implications This study did not include comparative data before the 2008 financial crisis. There is also a great deal of heterogeneity among Islamic banks in the samples that have been examined here and by other researchers and the constructed efficiency scores should be interpreted cautiously as divergent Islamic banks are pooled in the same samples. Practical implications This study identified factors that may help bank managers to improve their financial outlook by controlling revenue and cost efficiency profitability. These factors could as well help to understand how some indicators affect both cost and revenue efficiency, particularly in Islamic banking. It also seems that tighter restrictions on Islamic bank activities are negatively associated with bank efficiency. Islamic banks that directly compete with their conventional counterparts in the aftermath of the crisis are less efficient on both the cost and revenue frontiers. They are potentially hindered by the differential regulations of supervising authorities in dual banking systems. Social implications The authors provide recommendations regarding regulatory and other issues that are relevant to Islamic banking and further research is suggested. Findings are relevant to a variety of stakeholders (managers, policymakers and regulators). Islamic banking authorities could re-examine the benefits of partially moving to a more standardized/conventional system of banking by lifting some trading restrictions. In addition, developing and maintaining managerial skills is an indispensable instrument for the long-term endurance of any system. A related aspect is thus an effort to determine the holistic efficiency (including managerial) of Islamic banks as a guide for policymakers to improve managerial performance. Originality/value There is relatively limited empirical work that investigates the efficiency between Islamic and conventional banking in the aftermath of the crisis in the Gulf region despite the growing importance of this region on political and economic levels. The authors also examine the revenue efficiency measure often under-researched in the literature and particularly important for comparative studies. Overseas-owned banks have attained much higher infiltration levels in middle-eastern countries over the past decade. It has also been suggested that market penetration differences may also be related to bank efficiency concerns among countries and their financial systems as opposed to types of banks.

Managers’ perceptions of mental illness in Barbadian workplaces: an exploratory study

2017 ◽  
Vol 12 (3) ◽  
pp. 161-172 ◽  
Author(s):  
Dwayne Devonish
Keyword(s):  
Mental Health ◽  
Mental Illness ◽  
Public Sector ◽  
Small Sample ◽  
Content Type ◽  
Mental Health And Illness ◽  
Health And Illness ◽  
Private And Public ◽  
The Caribbean ◽  
Public Sector Managers

Purpose The purpose of this paper is to examine the perceptions of private and public sector managers in Barbados regarding the concepts of mental health and illness at work. It also explored their interactions and experiences with persons with mental illness at work and various forms of support and resources needed to improve the overall management of these persons within the organisational setting. Design/methodology/approach This qualitative study used an exploratory research design based on two focus groups of private and public sector managers. Findings The findings revealed that both private and public sector managers understood the distinction between the concepts of mental health and mental illness. However, managers believed that high levels of stigma and discrimination exist in both private and public sector workplaces due to a lack of understanding of mental illness, cultural norms, and socialisation in Barbados regarding mental illness and negative stereotypes. However, workplace education and promotion, associated workplace policies, and employee assistance programmes (EAPs) were identified as key strategies for effectively addressing issues of mental health stigma and the management of persons with mental illness at work. Research limitations/implications Due to the qualitative approach used and small sample selected based on non-probability sampling, generalising the findings to larger populations is heavily cautioned. Practical implications Organisations in both private and public sectors should emphasise workplace mental health interventions such as mental health education and awareness, the development and implementation of supportive and flexible policies, and EAPs. These strategies are likely to help destigmatisation efforts and enhance managers’ understanding of mental health and the management of persons with mental illness. Originality/value This study provided a rich and in-depth understanding of mental health and illness from the perspective of private and public sector managers in a small developing country in the Caribbean. The Caribbean region possesses a dearth of empirical research concerning issues of mental health and illness at work.

Professionalism, rewards, job satisfaction and organizational commitment amongst accounting professionals in Uganda

2014 ◽  
Vol 4 (2) ◽  
pp. 134-157 ◽  
Author(s):  
Samuel K. Sejjaaka ◽  
Twaha K. Kaawaase
Keyword(s):  
Job Satisfaction ◽  
Organizational Commitment ◽  
Public Sector ◽  
Work Experience ◽  
Structural Equation ◽  
Emerging Market ◽  
Measurement Scales ◽  
Market Conditions ◽  
Content Type ◽  
Private And Public

Purpose – The purpose of this paper is to examine the extent to which the constructs of professionalism (Hall, 1968), rewards (Bartol, 1979) and job satisfaction (Stamps and Piedmonte, 1986; Hampton and Hampton, 2004) can be used as valid predictors of organizational commitment (Porter et al., 1974) in an emerging economy context. Design/methodology/approach – Using pre-existing scales for these constructs, the authors collected data from 277 ICPAU licensees’ and carried out a factor analysis to examine their validity. Given the relevance of the organizational-professional conflict (OPC) debate to performance in public and private sector organizations, the authors use ANOVA to assess whether there are significant differences between CPAs in the private and public sectors. We also develop a structural equation model to assess the extent to which organizational commitment can be explained by professionalism, rewards and job satisfaction. Findings – The findings show that the four scales can be used as valid measures in an emerging market environment, albeit with some modifications. The correlations between the study variables are significant (p<0.01) but weak. There are also no significant differences between the scores of private and public sector Certified Public Accountant (CPAs) on professionalism, rewards and organizational commitment. However, there is significantly lower job satisfaction amongst CPAs employed in the public sector. The authors also find that job satisfaction is the best predictor of organizational commitment. Professionalism and rewards are weak predictors of organizational commitment. The fitted model shows that there is a weak fit between organizational commitment and professionalism, rewards and job satisfaction (GFI=0.86, RMSEA=0.086). Originality/value – The authors modify the extant measurement scales for use in emerging market conditions and show that with some adjustment, they are robust measures of the study variables. The paper also extends the organizational commitment (OC) debate to emerging market conditions and shows that rewards on their own are not enough to ensure organizational commitment amongst professionals. It is important to improve job satisfaction through more enriching work experience.

Profit efficiency analysis of rice production in Taiwan

2017 ◽  
Vol 9 (1) ◽  
pp. 32-47 ◽  
Author(s):  
Tsaiyu Chang ◽  
Daisuke Takahashi ◽  
Chih-Kuan Yang
Keyword(s):  
Farming System ◽  
Rice Production ◽  
Profit Efficiency ◽  
Content Type ◽  
Explanatory Variables ◽  
For Profit ◽  
Farm Survey ◽  
One Step ◽  
The Cost ◽  
Regression Adjustment

Purpose The purpose of this paper is to analyze and compare the profit efficiency of custom and self-farming methods of rice production in Taiwan. Design/methodology/approach This study examines the nature and extent of the profitability and profit efficiency of custom and self-farming based on a farm survey in Taiwan. Furthermore, it estimates the stochastic profit frontier to measure the degree of inefficiency and analyze the determinants of these inefficiencies. Findings The profitability and profit efficiency of custom farming are lower than for self-farming, and the differences in profitability are more significant for large rice farmers. The estimation results show that the custom farming area and the farmer’s age decrease efficiency and, regardless of the farming style used, larger farms have higher profit efficiency. Research limitations/implications This study’s findings show that self-farming is more favorable than custom farming for profit efficiency. This study examined this problem by conducting a regression adjustment for explanatory variables, but did not remove all self-selection bias, which may occur between profit efficiency and the choice of farming system. Originality/value Previous studies that measured the efficiency of rice farming often considered cost efficiency by the cost function, and ignored the increased profit from producing high-quality rice. This study used a one-step estimation of the profit frontier function to measure the degree of inefficiency and analyze the determinants of this inefficiency.

scholarly journals Privatization and Profit Efficiency: Evidence from Commercial Banks of Pakistan

2018 ◽  
Vol 8 (1) ◽  
pp. 1-14
Author(s):  
Samina Sabir ◽  
Abdul Qayyum
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Random Effect ◽  
Stochastic Frontier ◽  
Efficiency Score ◽  
Foreign Banks ◽  
Profit Efficiency ◽  
Cost Efficient ◽  
Domestic Banks ◽  
The Cost

This paper investigates the profit efficiency of commercial banks where the banking sector has completed more than two decade of changeover from nationalization policy to privatization and restructuring policy by employing stochastic frontier true effect and true random effect models. Intermediation approach has been used to choose input and output variables of banks. A balanced panel data of 22 commercial banks of Pakistan over the period 1995-2014 have been used for the empirical analysis. The paper found that commercial banks are on average 73% profit efficient. However foreign banks report high profit efficiency score followed private domestic banks and then state owned banks. We also compared the cost and profit efficiency of commercial banks and found that commercial banks are more cost efficient than profit efficient.

Cost efficiency analysis of scheduled commercial banks: empirical evidence from India

2018 ◽  
Vol 37 (7) ◽  
pp. 586-602
Author(s):  
Aparna Bhatia ◽  
Megha Mahendru
Keyword(s):  
Cost Efficiency ◽  
Commercial Banks ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Allocative Efficiency ◽  
Specific Reference ◽  
Tobit Regression ◽  
Content Type ◽  
Cost Inefficiency ◽  
Indian Banks

Purpose The purpose of this paper is to analyze and evaluate cost efficiency (CE) scores of Indian Scheduled Commercial Banks (SCBs) in India over a period of 22 years, i.e. 1991–1992 to 2012–2013. Design/methodology/approach Data envelopment analysis (DEA) – a non-parametric approach is used to calculate efficiency scores of banks. Further the efficiency scores are decomposed into technical and allocative efficiency. The differences in the efficiency scores across ownership as well as across reformatory and post-reformatory era are examined by applying Panel Tobit Regression. Findings The paper also identifies the reason for cost inefficiency among Indian banks. In addition, the nature of their return to scale of all SCBs has also been evaluated. The results of the paper depict that Indian SCBs have never achieved full CE score of 1 in any of the years of study. The dominant reason identified behind cost inefficiency is allocative inefficiency. Surprisingly, the results also highlight that SCBs exhibit higher CE scores in reformatory era as compared to the post-reformatory era. Originality/value With specific reference to India, even lesser literature is found on CE. Indian banking sector has witnessed many changes on account of liberalization, privatization and globalization (LPG). Before banks adapted to the new environment, the global financial crisis acted as a fuel to fire affecting the performance of banks. Thus, a reassessment over a longer period would help to know a wholistic view of the issue of cost inefficiency, which has always been a troubling factor for Indian banks.

Impact of service quality on customer satisfaction in private and public sector banks

2016 ◽  
Vol 34 (5) ◽  
pp. 606-622 ◽  
Author(s):  
Justin Paul ◽  
Arun Mittal ◽  
Garima Srivastav
Keyword(s):  
Public Sector ◽  
Customer Satisfaction ◽  
Service Quality ◽  
Private Sector ◽  
Content Type ◽  
Negatively Associated ◽  
Public Sector Banks ◽  
Private And Public ◽  
The Right ◽  
The Impact

Purpose – In today’s world, with increased competition, service quality has become one of the most popular areas of academic investigation. The purpose of this paper is to examine the impact of various service quality variables on the overall satisfaction of customers and compare the private and public sector banks using a sample from India. Design/methodology/approach – With the help of forward stepwise regression, the authors explain how a variety of variables are both negatively and positively influencing customer satisfaction. The authors collected data from 500 respondents in India; 250 of which were customers of private sector banks, and 250 of which were customers of public sector banks. The authors had a response rate of 65 percent. Findings – In the case of private sector banks, knowledge of products, response to need, solving questions, fast service, quick connection to the right person, and efforts to reduce queuing time were found to be the factors that are positively associated with overall satisfaction. Assistance to the customer, appearance, and follow up are negatively associated with customer satisfaction. On the other hand, in the case of public sector banks, knowledge of the product and fast service are the factors which are associated positively and appearance is the only factor that is negatively associated. Originality/value – The components of service quality that are positively associated are not the same in public sector banks as they are in private sector banks.

Nigeria forex restrictions are unsustainable

2021 ◽  
Keyword(s):  
Exchange Rate ◽  
Commercial Banks ◽  
Foreign Currency ◽  
Domestic Demand ◽  
Short Term ◽  
Content Type ◽  
Goods And Services ◽  
Special Drawing ◽  
Special Drawing Rights ◽  
The Cost

Significance Instead it ordered that all foreign exchange purchases should occur through commercial banks. This move aims to stabilise the value of the naira by reducing effective domestic demand for foreign currency. Impacts The CBN may allow commercial banks to provide forex to retail dealers as an alternative policy. The cost of imported goods and services will increase. A USD3.35bn IMF special drawing rights (SDR) allocation will bolster Nigeria’s short-term reserve position. Full exchange rate unification will not occur under President Muhammadu Buhari’s administration.

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