Size, Efficiency and Financial Reforms in Indian Banking

This paper by Dr. Pradeep Srivastava presents findings from a crosssection analysis of banking data in India for the fiscal year 1994-95. It focuses on two questions related to the Indian banking sector: Are bigger banks better for cost minimization? Have financial reforms made Indian banks more efficient? Using a multi-output translog cost function, the paper presents three different measures of economies of scale and scope in banking. A similar specification is used to estimate a stochastic frontier cost function for banks. The results are used to generate
bank-specific estimates of cost inefficiency across banks of different size and ownership.