Factors Influencing Profitability of Banks in India

Brahmaiah, Bezawada; Ranajee,

doi:10.4236/tel.2018.814189

Cited by 29 publications

(21 citation statements)

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“…For India, DAR, DTAR, and DER are found positive and significant but EAR, GDPGR, and IR are found to be negative and significant with ROA ( Tables 10 , 11 ). Thus, the analysis proves that there is a difference between Bangladesh and India (Tan, 2016 ; Brahmaiah, 2018 ) on the basis of banks' specific and macroeconomic factors. So, null hypothesis (H3) is hereby rejected.…”

Section: Discussionmentioning

confidence: 86%

“…Hasanov et al ( 2009 ) and Syathiri et al ( 2020 ) discovered that the size of a bank, the number of loans it makes, and the amount of money it lends out are all factors. Bank profitability is impacted by the adequacy of financial assets, the deposit-to-GDP level, and the operating efficiency, according to Brahmaiah ( 2018 ). Mohanty and Krishnankutty ( 2018 ) looked into the profitability of Indian banks.…”

Section: Literature Reviewmentioning

confidence: 99%

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Profitability determining factors of banking sector: Panel data analysis of commercial banks in South Asian countries

et al. 2022

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Aim of the articleThe main purpose of this article was to investigate the impact of the determinants of profitability on the commercial banks in Asian countries. An Asian country like Bangladesh and India was selected as the research field. The present study also pursues to examine the impact of specific factors and macroeconomic factors on the profitability in the Bangladeshi and Indian private commercial banking sectors.Methods applied and analysis toolsThe data were retrieved from the Annual Reports of Indian and Bangladeshi private commercial banks covering the period of 2010–2021. As sample, 40 private commercial banks were considered randomly, of which 20 were from India and 20 were from Bangladesh. The panel data research methodology was used as an estimation technique to analyze the data. Also, the ordinary least squares (OLS) regression model was used to scrutinize data. To check whether the models were appropriate, the Breusch–Pagan Lagrange Multiplier (LM) Test was employed. Banks' specific factors and microeconomic factors showed almost the same variations for both Bangladesh's and India's private banks. All models and tests were evaluated using E-views econometric software.The major findingsThe present study finds that the Return on Asset (ROA) from the banks' specific variables, strength of the Bank size (BS), and Debt to Asset Ratio (DAR) are found to be positive and significant. For banks, the Deposit to Asset Ratio (DTAR) and the Loan to Deposit Ratio (LDR) are found to be negative and significant. The Equity to Asset Ratio (EAR) and Debt to Equity Ratio (DER) do not have any positive/negative impact.Contribution, originality, and implicationsAs macroeconomic variables, the inflation rate (IR) and the GDP growth rate (GDPGR) are measured and found to be positive and significant for ROA. As macroeconomic variables, the Inflation Rate (IR) and the GDP Growth Rate (GDPGR) are found to be positive and significant in the case of ROA. The concerned authorities responsible for regulating the financial performance of the banking sector can use the results of this study to take various fruitful decisions on bank profitability.

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Section: Discussionmentioning

confidence: 86%

Section: Literature Reviewmentioning

confidence: 99%

Profitability determining factors of banking sector: Panel data analysis of commercial banks in South Asian countries

et al. 2022

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“…Profit is considered to be the ultimate destination of the commercial banks’ performance (Ongore & Kusa, 2013; Robin et al, 2018), and over the last several years, bank’s profitability has been comprehensively studied in various countries across the globe (Almaqtari et al, 2019). Almost all studies lay stress on the internal or bank-related factors and external or macroeconomic factors influencing commercial banks’ performance (Abdullah et al, 2014; Al-Homaidi et al, 2018; Almaqtari et al, 2019; Anbar & Alper, 2011; Antoun et al, 2018; Athanasoglou et al, 2008; Brahmaiah & Ranajee, 2018; Caporale et al, 2017; Curak et al, 2012; Demirgüç-Kunt & Huizinga, 1999; Dietrich & Wanzenried, 2014; Ebenezer et al, 2017; Flamini et al, 2009; Gul et al, 2011; Jara-Bertin et al, 2014; Kamarudin et al, 2016; Le & Ngo, 2020; Luft & Omarkhil, 2018; Molyneux & Thornton, 1992; Masood et al, 2015; Muhammad, 2015; Ongore & Kusa, 2013; Pasiouras & Kosmidou, 2007; Petria et al, 2015; Rashid & Jabeen, 2016; Saeed, 2014; Saona, 2016; Subbarayan & Jothikumar, 2017; Yahya et al, 2017; Yao et al, 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

Factors Influencing the Performance of Commercial Banks: A Dynamic Panel Study on India

Sarkar

Rakshit

2021

FIIB Business Review

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The article investigates the determinants of commercial banks’ performance in India over the period from 2000 to 2017 with special reference to the macroeconomic factors. Considering return on assets (ROA), return on equity (ROE) and net interest margin (NIM) as the measure of performance, we have chosen a panel of public and private sector commercial banks of our country. Taking some macro variables such as GDP, inflation and lending interest rate as the prime explanatory variables along with some bank-specific and macroeconomic control variables, first difference generalized method of moments (GMM) method has been applied to observe the impact of these macroeconomic factors on the performance of commercial banks. Results indicate that external variables significantly affect commercial banks’ performance and these findings remain unaltered with the sequential inclusion of all control variables. This work has immense importance to the bankers, planners and policymakers in shaping appropriate policy decisions for the commercial banks.

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“…4. Brahmaiah, B. and Ranajee (2018) 4 , revealed that the GDP growth and inflation has a bad effect in association with the return on assets (ROA) and inflation has good effect on the return on equity (ROE) which taken 89 banks functioning in India for a period of 10 years from 2002 to 2015. 5.…”

Section: Introductionmentioning

confidence: 99%

Profitability Analysis of Public Sector Banks in India

2022

epra

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Economic development of any nation depends on its efficient financial operations of the banking networks. Indian banking sector facing severe NPA issues. In order to overcome this problem, Government of India started merging activities. Some major mergers took place in recent years which made the Indian Banking Sector effective, innovative and competitive in the global level. Public sector banks which left as an independent public sector bank after merging process conducted by government of India in the last few years are taken as a sample for the study. The purpose of this article is to determine the financial factors affecting the performance of public sector banks in India. This article analyzed the financial data of six independent public sector banks for the period of four years from 2017-18 to 2020-21. For analysis purpose, used secondary data from various financial websites and only quantitative data is considered and ratio analysis and descriptive statistics are used for analysis purpose. The present study has examined the financial performance in the public sector banks which has a significant result in terms of Net Profit Margin, Return on Net Worth, Operating Expense / Total Income and Capital Adequacy Ratios Bank of India performed better. Central Bank of India functioned well in getting significant long term returns and all selected sample banks shown negative outcome in the relation of Net Profit / Total Funds. Bank of Maharashtra revealed its inefficiency in maintaining negative loan turnover ratio, while Central Bank of India more efficient bank which has Positive Loan turnover ratio. Outperformed Punjab and Sind Bank in terms of Total Assets Turnover Ratio, Advances / Loans Funds and Earnings Per Share. All selected six sample Banks has less than one (<1) Current ratio in shown inefficient in making its dues in a time. Punjab and Sind bank and UCO Bank used its huge amount of interest earned income for making payment of Interest expenses. From the study it is clear that there is a need to improve the overall profitable performance of selected sample of public sector banks by the government which is in need for its survival. KEYWORDS: Profitable Performance, Public sector banks, ratio analysis.

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Factors Influencing Profitability of Banks in India

Cited by 29 publications

References 28 publications

Profitability determining factors of banking sector: Panel data analysis of commercial banks in South Asian countries

Profitability determining factors of banking sector: Panel data analysis of commercial banks in South Asian countries

Factors Influencing the Performance of Commercial Banks: A Dynamic Panel Study on India

Profitability Analysis of Public Sector Banks in India

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