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

Sarkar, Sreemanta; Rakshit, Debdas

doi:10.1177/23197145211021564

Cited by 9 publications

(3 citation statements)

References 54 publications

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“…However, ref. [74] revealed that increasing unemployment causes a rise in banks' profitability in India.…”

Section: Sovereign Social Performancementioning

confidence: 99%

Examining the Quadratic Impact of Sovereign Environmental, Social, and Governance Practices on Firms’ Profitability: New Insights from the Financial Industry in Gulf Cooperation Council Countries

Athari,

Saliba,

Abboud

et al. 2024

Sustainability

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The present study particularly aims to probe the quadratic effects of the combined and individual sovereign environmental, social, and governance (ESG) activities on the banking sector’s profitability. Furthermore, we attempt to shed light on the channels through which sovereign ESG practices impact the banking sector’s profitability. Unlike the vast majority of prior works that investigated the sustainability practice–firms’ profitability nexus from the firm level, this study originally probes this relationship from the country level by considering the sovereign ESG sustainability activities. To attain this purpose, we focus on banking sectors operating in Gulf Cooperation Council (GCC) economies and employ the panel-fixed effects and panel-corrected standard errors approaches between 2000 and 2022. Remarkably, the findings uncover that the nexus between combined sovereign ESG and profitability is a non-linear and inversed U-shape (concave), implying that investing in sovereign ESG enhances the banking sector’s profitability. However, after exceeding an inflection point (0.349), its effect turns out to be negative and it develops into activities of destruction. Furthermore, the findings underscore that the association between individual sovereign environmental responsibility and the banking sector’s profitability is a non-linear U-shape (convex), while an inversed U-shaped (concave) nexus is uncovered for the individual sovereign social and governance activities. Moreover, the significant non-linear inverted U-shape for the combined sovereign ESG–stability nexus corroborates that financial stability is a channel through which sovereign ESG significantly impacts profitability.

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“…However, ref. [74] revealed that increasing unemployment causes a rise in banks' profitability in India.…”

Section: Sovereign Social Performancementioning

confidence: 99%

Examining the Quadratic Impact of Sovereign Environmental, Social, and Governance Practices on Firms’ Profitability: New Insights from the Financial Industry in Gulf Cooperation Council Countries

Athari,

Saliba,

Abboud

et al. 2024

Sustainability

View full text Add to dashboard Cite

show abstract

“…As macroeconomic variables, the inflation rate (IR) and the GDP growth rate (GDPGR) are measured and found to be positive and significant for ROA". Sarkar, S., & Rakshit, D. [54] investigated "the determinants of commercial banks' performance in India over the period from 2000 to 2017 with special reference to the macroeconomic factors. They were ted return on assets (ROA), return on equity (ROE) and net interest margin (NIM) as the measure of bank performance and also took some external variables such as GDP, inflation, and lending interest rate as the prime explanatory variables along with some bankspecific and macroeconomic control variables.…”

Section: Vasanimentioning

confidence: 99%

Factors Determining the Financial Performance of Public Sector Banks in India

Nalliboyina,

Chalam

2023

AJEBA

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Now, an attempt is made in this paper to examine the determinants of profitability in Indian public sector banks during the period 2010-11 to 2021-22. For this purpose, a sample of 12 public sector banks listed in NSE & BSE has been taken. Multiple Linear Regression Analysis has been used to investigate the impact of independent variables such as a bank’s asset size (Size), capital adequacy ratio (CAR), cost to income (CTI), net non-performing assets (NPA), credit risk (CrR), credit deposit ratio (CDR),economic growth (GDP) and consumer price index (CPI) inflation on key bank profitability indicators, i.e., return on assets (ROA), return on equity (ROE) and net interest margin (NIM)as dependent variables, separately. The main findings show that bank asset size, cost to income, net non-performing assets, credit deposit ratio, and inflation are negatively related to ROA, ROE, and NIM. Credit risk and economic growth (GDP) have a positive impact on ROA, ROE, and NIM. While the capital adequacy ratio hurt ROA and NIM except for ROE. Even though overall explanatory and macroeconomic factors have a significant 5 percent effect on ROE and NIM as denoted by F-statistics value. Moreover, the banking sector has benefited weakly significantly from both economic growth and the inflationary environment. It is also suggested that if banks concentrate on these variables, they would be able to generate better profitability in the present globalized era. These findings are of value to both academicians and policymakers.

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“…Finally, in terms of methodology, to enhance the robustness of the results, this study utilizes an advanced approach-the generalized method of moments (GMM). The GMM is a widely recognized econometric technique that offers several advantages, particularly in addressing endogeneity issues inherent in panel data analysis (Chowdhury et al 2017;Zarrouk et al 2016;Rahman et al 2020;Sarkar and Rakshit 2021). By employing the GMM, we can effectively mitigate potential biases arising from endogeneity, such as omitted variable bias and simultaneity, which could otherwise distort our estimation results.…”

Section: Introductionmentioning

confidence: 99%

Bank-Specific and Macroeconomic Determinants of Profitability of Islamic Shariah-Based Banks: Evidence from New Economic Horizon Using Panel Data

Gazi,

Karim,

Senathirajah

et al. 2024

Economies

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The purpose of this study is to analyze significant variables that permit us to ascertain the profitability of Bangladeshi Shariah-based banks. In doing so, two profitability measurements, namely, return on asset (ROA) and return on equity (ROE), have been used as dependent variables, while capital adequacy, asset management quality, operational efficiency, credit risk, liquidity, and the size of the bank have been considered as bank-specific independent variables. In addition, the rate of interest, inflation, and GDP growth rate have also been taken as macroeconomic independent variables. This study examined panel data of eight Shariah-based Islamic banks over a thirteen-year period spanning from 2010 to 2022, applying different kinds of linear regression models, including pooled ordinary least squares (OLS), fixed effects, and random effects. Subsequently, the generalized method of moments (GMM) approach is also applied to assess the robustness of the findings. The results revealed that the profitability of Bangladeshi Shariah-based Islamic banks is positively associated with asset management quality, liquidity, and credit risk. In contrast, capital adequacy, operational efficiency, and bank size are negatively correlated with the bank’s profitability. Concerning the macroeconomic factors, the findings indicated a notable positive correlation between the profitability of Shariah-based banks in Bangladesh and both the inflation rate and the interest rate spread. However, this study has also found that the profitability of the sample banks of Bangladesh is not significantly influenced by GDP growth. By providing fresh empirical data, the current research aimed to close a significant vacuum in the body of knowledge on banks and provide important insights for policymakers, managers, and other stakeholders by focusing on particular bank-specific and macroeconomic aspects that influence the profitability of Shariah-based Islamic banks in Bangladesh.

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

Cited by 9 publications

References 54 publications

Examining the Quadratic Impact of Sovereign Environmental, Social, and Governance Practices on Firms’ Profitability: New Insights from the Financial Industry in Gulf Cooperation Council Countries

Examining the Quadratic Impact of Sovereign Environmental, Social, and Governance Practices on Firms’ Profitability: New Insights from the Financial Industry in Gulf Cooperation Council Countries

Factors Determining the Financial Performance of Public Sector Banks in India

Bank-Specific and Macroeconomic Determinants of Profitability of Islamic Shariah-Based Banks: Evidence from New Economic Horizon Using Panel Data

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