Purpose: This paper focuses on giving a holistic explanation and positional identification of select commercial banks of the Indian Banking Industry. The focus is converged towards revenue perspective, i.e. profit efficiency and the impact and degree of responsiveness of Non-Performing Assets (NPA) towards the profit efficiency of the select commercial banks. Design/ Methodology/ Approach: The secondary data source was CMIE Prowessi database. The sample size was the 34 banks comprising both public and private banks in India. The parametric approach Stochastic Frontier Approach (SFA) was used for the estimation of profit efficiency. Panel regression model was used to obtain the impact of the select control variables on the efficiencies of commercial banks across a time span. Findings: The inferences indicated that both private and public owned banks have very less divergence among their mean efficiencies. Also, the estimation of panel regression depicted a highly negative relationship with NPA and moderately positive relationship size of the bank. Practical Implication: With an alarming increase in reducing NPA, this paper tends to give an insight to the strategic decision-making panel, where banks with managed asset liability and well mitigated credit risk, tend to survive during downturns. Originality/ Value: While past literatures focus on positional inferences of banks on the efficient frontier, this paper seeks to understand the factors impacting the efficiency as well as the quantum of impact of the control variables, thus, adding novelty to this paper.
Volume 11 | 04-Special Issue
Pages: 144-156