Post-merger Total Factor Productivity of Public Sector Banks (PSBs) in India: A Non-parametric Analysis

The purpose of the article is to evaluate total factor productivity (TFP) of 12 Public Sector Banks (PSBs) in India from 2020–2021 to 2022–2023 after a series of bank mergers that were completed in the year 2019. Malmquist Productivity Index-Data Envelopment Analysis is used to evaluate TFP. The average TFP change of PSBs is 1.022, indicating that PSBs have comparatively progressive productivity change after the merger of various banks. The decomposition of the productivity change index proposes that the usage of technology directly contributed to the improved TFP of PSBs. Bank of India, Bank of Baroda, Canara Bank, Bank of Maharashtra, Central Bank of India, Indian Bank, Union Bank of India, and State Bank of India have more productivity than the base year across the study period, and these banks are categorized as “good-performer” banks. Indian Overseas Bank is the most inefficient one in terms of TFP scores. To the best acquaintance of researchers, no empirical work has been carried out with respect to measuring the TFP of PSBs after the wave of bank mergers. It also suggests implications for effective and resourceful management of the resources of PSBs.