CHANGES IN ECONOMIC REGIME AND PRODUCTIVITY GROWTH - A STUDY OF INDIAN PUBLIC-SECTOR BANKS

The total factor productivity (TFP) growth of Indian public sector com mercial banks is examined using 23-year-long panel data. A multiple-ou tput translog cost sq-stem, extended to accommodate both heteroskedast icity and autocorrelation, is used to measure TFP growth in the presen ce of quasi-fixed factors. TFP growth is further decomposed into three components, i.e., technological change, scale economies, and the effe ct of imperfect adjustment of quasi-fixed factors. The translog cost s ystem is corrected for both heteroskedasticity and autocorrelation. On average, the banks achieved an annual TFP grow-th of 2%. During recen t deregulation, the growth rate has improved to 7%. (C) 1997 Academic Press.