Artha Vijnana: Journal of The Gokhale Institute of Politics and Economics

Ram Pratap Sinha ¹

Affiliations
1 Department of Economics. Acharya Brojendra Nath Seal (Government) College, Coochbehar 736101, IN

Abstract

The present paper compares thirteen life insurance companies in respect of technical efficiency for the period 2002-2003 to 2005- 2006 using the assurance region approach. The assurance region approach was introduced by Thompson, Singleton, Thrall and Smith (1986) and was further developed by Thompson, Langemeier. Lee, Lee and Thrall (1990). This approach avoids the problem of slacks by imposing restrictions on the shadow prices of inputs and/or outputs. This leads to a reconstruction of the isoquant in a manner such that no slacks can exist at the radial projection of any input/output bundle onto the modified isoquant.

Year to year comparison of mean technical efficiency scores reveal that mean technical efficiency has improved in 2003-2004 . relative to 2002-2003, remained on the same level in 2004-2005 and declined in 2005-2006. This is likely because of divergence in the performance across the life insurers. In the last two years, most of the life insurers have exhibited increasing returns to scale. This is indicative of the wide opportunities that the insurers have in store for them.

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Ram Pratap Sinha ¹, Biswajit Chatterjee ²

Affiliations
1 Department of Economics, Acharya Brojendra Nath Seal (Government) College, Coochbehar - 736 101, West Bengal, IN
2 Jadavpur University, Kolkata – 700 032, West Bengal, IN

Abstract

The present paper tries to make an asset quality based ranking of select (28) Indian commercial banks for four years period 2001-2002 to 2004-2005 using the super efficiency approach - a non-parametric tool. The super efficiency approach due to Andersen and Petersen (1993), allows rank order technically efficient firms. In this approach, a firm which is under evaluation is not included in the reference set of the relative envelopment model. A firm is called super efficient if its observed output exceeds what is necessary for the firm to be considered efficient relative to other firms in the sample. Out of the 28 observed commercial banks, the number found to be super efficient was only in the range between 5 to 8 during observed years. The rest were found to be inefficient. Further, the results obtained from the exercise indicate gradual improvement in mean technical efficiency scores (excepting 2003-2004) over the observed years. The observed private sector banks exhibit higher mean technical efficiency relative to the observed public sector banks for all the observed years.

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