Productivity analysis of Sri Lankan cooperative banks: input distance function approach

This study examined how Sri Lankan cooperative banks performed in changing markets and environmental conditions, including the COVID-19 pandemic. We analyzed quarterly financial data for 103 rural (CRBs) between 2016 2020 to estimate technical efficiency total factor productivity (TFP) using input distance function with multiple outputs. The (TE) of CRBs declined from 99 85% over period differences TE increased substantially. TFP decreased substantially, by 38%, so further analysis, change was separated into a three component-scale change, change. According decomposition, dominant contributing this decline scale loan relief program enacted during crisis, as well competition market, may have reduced size operations, thus possibly decline. second component, overall positive, but minute likely due reluctance banks’ adopt new technologies. third component negative throughout period, operating expenses non-performing loans. These findings suggest need more market-sensitive government intervention, adaptation modern technology, comprehensive human resource development enhance performance CRB operations.