ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Cost and Profit Efficiency of Indian Banks during 1986-2003

This study examines efficiency of all scheduled commercial banks in India for whom data was available for the period 1986-2003. We employ the technique of stochastic frontier analysis to estimate bank-specific cost and profit efficiency. We find that while cost efficiency of the banking industry increased during the period, profit efficiency underwent a decline. This result is expected in an emerging economy undergoing a process of deregulation. In terms of bank groups, domestic banks appear to be more efficient than foreign banks.

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