Assessing Efficiency of Indian Banking Sector in Merger Era: A Two Stage DEA Approach

PurposeThe main objective of this paper is to present a holistic approach for measuring overall bank efficiencywhich empirically evaluate the performance of public and private sector banks operating in India.Design/methodology/approachA two-stage Data Envelopment Analysis (DEA) model has been employed to assess intermediation andprofitability efficiencies, along with the overall efficiency of banks. In the DEA framework, Overall TechnicalEfficiency (OTE), Pure Technical Efficiency (PTE), and Scale Efficiency (SE) have been estimated for all 12Public Sector Banks (PSBs) and 12 Private Sector Banks (PVTs) using an input-oriented approach.Furthermore, Tobit regression has been applied to identify the key determinants influencing bankefficiency. The study covers the period from 2010 to 2024.