Sponsor
Portland State University. Department of Engineering and Technology Management
First Advisor
Timothy Anderson
Term of Graduation
Spring 2024
Date of Publication
6-5-2024
Document Type
Dissertation
Degree Name
Doctor of Philosophy (Ph.D.) in Technology Management
Department
Engineering and Technology Management
Language
English
DOI
10.15760/etd.3762
Physical Description
1 online resource (xi, 234 pages)
Abstract
Financial intermediation is the process by which financial intermediaries facilitate the flow of funds between depositors and creditors. Financial intermediation is critical in facilitating economic growth and fostering technological innovation. An effective and robust financial intermediation is key for a well functioning financial sector and the overall economy. So, it is vital to study the efficiency and productivity of the financial sector to discover any inefficiencies in the intermediation process and to implement robust policies to improve efficiency.
Researchers have examined the banking sector's efficiency and productivity using parametric and non-parametric methods, incorporating diverse inputs and outputs. However, there is an ongoing debate about the potential influences of endogenous and exogenous factors on whether the estimated efficiency scores are biased because of them or not. Additionally, there is a longstanding recognition of the impact of both exogenous and endogenous factors on efficiency. There is a common misconception that productivity indices require balanced panel data, and a reason for such beliefs is that some popular software options do not handle unbalanced panel data when calculating productivity indices.
In this dissertation, I use a two-stage process to analyze the effects of exogenous and endogenous factors on efficiency. The two-stage process uses Data Envelopment Analysis (DEA) in the first stage to analyze efficiency. Tobit is used in the second stage to see the effects of the different variables on efficiency. Malmquist productivity index (MPI) is used to analyze productivity and to overcome the shortcomings related to unbalanced panel data; we extend the implementation of MPI to support unbalanced panel data.
The results from the efficiency analysis show that the current year's GDP and the previous year's GDP are the only exogenous variables that are statistically significant, and size, cash deposit ratio, return on assets (ROA), return on investments (ROI), and capital adequacy ratio are statistically significant endogenous variables. The average productivity of the banking sector using the new implementation of MPI shows that the banking sector has progressed in the analyzed period.
The research contributes several ways to the knowledge of efficiency and productivity in the banking sector. This study shows that exogenous and endogenous variables contribute to efficiency, and banks can control them to improve their efficiency. On the methodological contribution, I extend the implementation of the Malmquist productivity index to support unbalanced panel data. The implementation is available in the MultiplierDEA R package in CRAN.
Rights
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Persistent Identifier
https://archives.pdx.edu/ds/psu/42233
Recommended Citation
Kalathil Puthanpura, Aurobindh, "Effects of Exogenous and Endogenous Variables on Efficiency and Productivity: Case of Indian Banks" (2024). Dissertations and Theses. Paper 6630.
https://doi.org/10.15760/etd.3762