Commercial bank efficiency is of paramount importance for the sustenance of the financial sector. In view of this, the study seeks to evaluate and explain the technical efficiency of Indian private and publicly owned banks for a seven-year period (2017–2018 to 2023–2024) using the data envelopment analysis approach. However, the present study does not follow the Markov chain Monte Carlo simulation approach, which has been followed in the extant efficiency literature. Instead, the study uses a Gaussian distribution for deriving the prior and posterior probability distributions. For modelling the weights, we have used the Dirichlet distribution to ensure non-negativity. The study finds two key results. First, no definite trend of superiority/inferiority of publicly owned commercial banks over the private ownership banks is found. Second, efficiency has a significant and positive relationship to asset composition. The impact of bank size, however, was found to be negative.
Sinha et al. (Thu,) studied this question.