Does Banks’ Size Matter In India?* | Gunjan M. Sanjeev

Lately there has been a focus on consolidation of banks operating in India. It is felt that larger banks will be able to benefit from the economies of scale and will benefit in terms of profitability by taking on larger projects. As the size increases, efficiency becomes a matter of increasing concern. This study has evaluated the efficiency of the public sector banks operating in India for a period of five years (1997-2001) using the Data Envelopment Analysis (DEA). Further, it is has investigated if there exists any relationship between the efficiency and size of the banks. The results of the study suggest that no conclusive relationship can be established between the efficiency and size of the banks.