A cross-country efficiency and productivity evaluation of commercial banks in South Asia: A meta-frontier and Malmquist productivity index approach

Wasi Ul Hassan Shah; Gang Hao; Nan Zhu; Rizwana Yasmeen; Ihtsham Ul Haq Padda; Muhammad Abdul Kamal

doi:10.1371/journal.pone.0265349

A cross-country efficiency and productivity evaluation of commercial banks in South Asia: A meta-frontier and Malmquist productivity index approach

PLoS One. 2022 Apr 6;17(4):e0265349. doi: 10.1371/journal.pone.0265349. eCollection 2022.

Authors

Wasi Ul Hassan Shah¹, Gang Hao², Nan Zhu³, Rizwana Yasmeen⁴, Ihtsham Ul Haq Padda⁵, Muhammad Abdul Kamal⁶

Affiliations

¹ School of Management, Zhejiang Shuren University, Hangzhou, China.
² Department of Management Sciences, City University of Hong Kong, Hong Kong, Hong Kong Special Administrative Region, China.
³ The Western Business School, Southwestern University of Finance and Economics, Chengdu, China.
⁴ School of Economics and Management, Panzhihua University Panzhihua, Sichuan, China.
⁵ Department of Economics, Federal Urdu University of Arts, Science and Technology, Islamabad, Pakistan.
⁶ Department of Economics, Abdul Wali Khan University Mardan, Mardan, Khyber Pakhtunkhwa Province, Pakistan.

Abstract

South Asia primarily consists of developing economies with diverse financial systems. The commercial banking industry plays a crucial role in each country's financial development in the region. This research aims to evaluate commercial banking industries' efficiency and productivity growth in the South Asian (SA) region over 6 years (2013-2018). In addition, the technology gap among the banking industries of all countries is also explored. Data envelopment analysis (DEA) Meta-frontier is employed to measure the technical efficiency (TE) and technology gap ratio (TGR) among the countries. Further Malmquist productivity index (MPI) is used for productivity change estimation. Results indicate that, on average, 147 commercial banks (CBs) have a technical efficiency score of 0.6208, while CBs in Nepal are the most efficient in the region with an average score of 0.7153. The Meta frontier analysis also confirms the presence of different production technologies in CBs. Nepal's CBs group frontier is closer to meta-frontier (technology gap ratio, TGR = 0.9361) While, Bangladesh, Pakistan, India, and Sri Lanka rank second, third, fourth, and fifth, respectively. The results of productivity contend that the total factor productivity change of all 147 CBs decreases by 0.8 percent on average over the study period. CBs have enhanced their productivity growth in Sri Lanka, Nepal, and Pakistan, but declining trends have been witnessed in Indian and Bangladesh's commercial banking industries.

Publication types

Research Support, Non-U.S. Gov't

MeSH terms

Bangladesh
Efficiency*
India
Industry*
Technology

Grants and funding

This study is sponsored by the Talent person recruitment project of Zhejiang Shuren University (KXJ0121610). RGC (Research Grant Council) of the Hong Kong SAR Government (project #: 9042713). The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.