Financial Inclusion and Bank Efficiency: Evidence from Data Envelopment Analysis

 Manjari Yadav
Tarak Nath Sahu

Sudarshan Maity

Abstract

The issue of low financial inclusion in developing countries is an existing reality which needs to be improved. The present study focuses on evaluating the bank efficiency of India’s major drivers of financial inclusion, i.e., public and private sector banks, in fulfilling their task of financial inclusion. The time period considered is 2009/2010 to 2019/2020. A comparative evaluation of the role played by public and private sector banks in financial inclusion initiatives is measured on technical grounds using Data Envelopment Analysis. The Technical Efficiency scores conclude that the private banks are technically more efficient than the public sector in fulfilling this task. The public sector lags behind due to inefficient input utilization and they can improve their efficiency by switching to tech-based services like kiosk banking and internet banking, and jointly promoting financial inclusion with private banks in order to improve their efficiency and save on their input resources.

Keywords: Financial Inclusion, Data Envelopment Analysis, Technical Efficiency, Managerial Efficiency, Scale Efficiency

Volume 13, Issue 1

June 30, 2022

Pages: 141-169

DOI: http://doi.org/10.4038/cbj.v13i1.92

Suggested citation:

Yadav, M., Sahu, T. N., & Maity, S. (2022). Financial inclusion and bank efficiency: Evidence from data envelopment analysis. Colombo Business Journal, 13(1), 141-169.

Manjari Yadav

Department of Commerce, Vidyasagar University, India

Tarak Nath Sahu

Department of Commerce, Vidyasagar University, India

taraknathsahu1@mail.vidyasagar.ac.in

Sudarshan Maity

The Institute of Cost Accountants of India, India