Data Analysis and Interpretation:
In this report we have focused on the public sector banks i.e. the nationalized banks and SBI and its associates. We have collated the data for these two groups of banks and used them as one.
We can consider multiple output and input measures, which are in particular applicable to the Indian Banking industry. However for this case we have considered output as deposits and inputs as capital and labour costs. Following this approach, we have defined output as the rupee value of total deposits at the end of the year. We have measured labour by the number of employees which comprises of all the employees viz., officers and other employees i.e., clerks and sub staff. Capital input is a crucial input in the production process and it is the most complex of all the inputs to measure and has been taken as the value of the net fixed assets of the banks.

We already have the formula for Cobb-Douglas production function:
F (K, L) = A.Kα.Lβ
Here K represents capital, L represents labour and A, α, β are Positive constants. In order to calculate the value of A, α, β we need to convert this equation into a linear one. Taking the natural logarithm of both the sides we get, logeF = logeA + α logeK+ β logeL
Where logeF = Y, logeA = C, logeK = x1, logeL = x2, α= A, β= B
Now we plot the multiple regression line for the variables F, K and L through the data obtained for the public sector banks over the range of years , and we obtain the values for the coefficients A, B and C in the standard line equation. To get the value of A, α, β we take the anti log that is e raised to the power.
To calculate the values of α and β, we first need to convert the above equation into a linear equation of the form Y=Ax1+Bx2+C
Taking natural logarithms on either side, we get logeF = logeA + α logeK+ β logeL
Where logeF = Y, logeA = C, logeK = x1, logeL =