DIGITAL FINANCIAL SERVICES (DFS) AND PRODUCTIVITY OF INDIAN BANKING SECTOR - EMPIRICAL EVIDENCE USING MALMQUIST PRODUCTIVITY INDEX AND PANEL DATA REGRESSION; SERVIÇOS FINANCEIROS DIGITAIS (DFS) E PRODUTIVIDADE DO SETOR BANCÁRIO INDIANO - EVIDÊNCIA EMPÍRICA USANDO ÍNDICE DE PRODUTIVIDADE MALMQUIST E REGRESSÃO DE DADOS EM PAINEL; SERVICIOS FINANCIEROS DIGITALES (DFS) Y PRODUCTIVIDAD DEL SECTOR BANCARIO INDIO - EVIDENCIA EMPÍRICA UTILIZANDO EL ÍNDICE DE PRODUCTIVIDAD DE MALMQUIST Y LA REGRESIÓN DE DATOS DE PANEL

Abstract

Purpose: The aim of this study is to examine the impact of Digital Financial Services (DFS) on the productivity of banking sector in India. Theoretical framework: This research considered various digital banking services offered by bank and how it affects the actual bank performance in terms of productivity, by adopting a two-stage model i.e., Malmquist Productivity Index (MPI) and panel data regression. Design/Methodology/Approach: The empirical study was based on eight-year balanced panel data from 2012 to 2020. The sample of the study consists of forty-four commercial banks from India. This study is completely based on secondary data collected from the website of the database of the Indian economy and the National Payment Corporation of India (NPCI). To achieve the research goals, a two-stage approach has been used. Initially, Malmquist Productivity Index (MPI) was employed to estimate the total factor productivity changes. In the second phase, panel regression analyses were used to study the impact of Digital Financial Services (DFS) on bank productivity. Findings: The findings show that the Digital Financial Services (DFS) variables such as mobile banking, online banking, Automatic Teller Machines (ATM) and Point of Sale (POS) transactions are significantly improved the productivity of the Indian banking industry. Research, Practical & Social implications: The study addresses the issues such as identifications of factors affecting the productivity of banks including Digital Financial Services (DFS). In the world of digital revolution, it analyses whether bank can retain, continue and enhance their performance by offering modern product and services to their customers. Originality/Value: This article has conducted extensive analyses of Digital Financial Services (DFS) and banks' productivity. The authors also provide suggestions for the policymakers for the future implementation of digital banking services. © 2024 ANPAD - Associacao Nacional de Pos-Graduacao e Pesquisa em Administracao. All rights reserved.