ABSTRACT

The authors tested the hypothesis that the performance of private, relative to that of public, banks in India remained more stable over the high-growth (2004−2010), pre-Insolvency and Bankruptcy Code (pre-IBC) (2011−2016), and post-IBC (2017-2021) periods because of their corresponding better stability in managerial efficiency (ME) than in technical efficiency (TE). We obtained the hypothesized Ownership X Period effects on three objective criteria of bank performance, namely, net profit margin, return on equity, and return on assets, and on two putative mediators of ME and TE estimated. Supporting the property rights hypothesis, the private banks (ns = 17-21), compared to the public ones (n = 12), showed greater resistance to inefficiency over the periods studied. The hypothesized moderated sequential-mediation model that placed ME before TE represented the interaction effects on bank performance more suitably than did the alternative models. Findings empirically distinguished the estimated ME from TE underlying the input-output transformation and illustrated the precedence of ME to TE in bank performance. We discuss the theoretical, methodological, and practical implications of the findings along with suggestions for future research.

Keywords: Criteria of bank performance; bank restructuring; managerial efficiency; moderation and mediation; property rights; technical efficiency