Input-Output Model Selection in DEA Evaluation Framework for Efficiency Optimization of Indian Banks

By : Seema Garg , Pankaj Kumar Gupta

Page No: 34-47

Abstract
Efficiency of the banking system is critical to every economy. Owing to intense competition, increased customer expectation and a dynamic financial environment, the efficiency and performance evaluation have become a serious concern for the bank managers and stakeholders and regulators and government at large. The choice of an appropriate method of performance, efficiency evaluation is critical to decision makers and policy makers. In the recent past, Data Envelopment Analysis (DEA) has emerged as an effective tool for judging various efficiency aspects of the DecisionMaking Units (DMUs). Within the DEA framework, we find a variety of methods and approaches which have their own benefits and limitations. Analysis of literature hints out that the major problem of contrasting research outputs owes to the selection of input and output variables. In this paper, we have formulated various models by combining inputs and outputs and using a sensitivity analysis, we evolve a methodology for model selection that can best suit to evaluate the performance efficiency of Indian banks. We argue that our approach is better compared to the conventional production approach used by authors in an Indian context and is independent of time frames and sample data sets.

Authors :
Seema Garg : Associate Professor, Amity International Business School, Amity University, Noida
Pankaj Kumar Gupta : Professor, Centre for Management Studies, Jamia Millia Islamia University, New Delhi (India).
 

DOI: https://doi.org/10.32381/PROD.2020.61.01.4