4. The Indian commercial bank data
The Indian Banks' Association (IBA) provides a
rich source of data on the operations of all commercial banks. Its Financial Analysis of Banks contains
balance sheet and income data, as well as information on the number and type of branches, the number
and type of staffs and fortnightly averages of several
other key variables. These data are statutorily audited, and they are public information. The IBA
already uses these data to calculate various financial
performance ratios; see various issues of Financial
Analysis ofBanks (IBA, 1986-1992).
We have gathered requisite data for 70 commercial banks over the period 1986-1991. However data
are not available for all banks for all six years.
Sixty-eight banks are observed in the year 1986.
(7)
where 4,(.) is the standard normal density function.
The estimated value of 7 ft provides an estimate of
the random efficiency variation effect.