Download or read book A Comparison of Key Determinants on Profitability of India s Largest Public and Private Sector Banks written by Rajveer Rawlin and published by . This book was released on 2017 with total page 8 pages. Available in PDF, EPUB and Kindle. Book excerpt: The banking sector in India has come under the scanner following some key changes in monetary policy. With the Reserve bank of India (RBI) raising interest rates to support the falling Indian currency the Rupee, the cost of funds of banks has increased significantly. This could manifest itself in rising non-performing assets (NPAs) and declining profitability. The profitability of banks is impacted by both internal and external factors. This paper is an attempt to compare the key drivers of profits at India's largest public and private sector banks. Bank specific metrics and risk factors were important drivers of profits at both banks. Productivity measures were key drivers of profits at India's largest public sector bank SBI but had no effect on profits at India's largest private sector bank, HDFC bank. Asset usage efficiency measures were key determinants of profitability at HDFC bank but not at SBI. The single most important determinant of SBI proved to be business per employee, a productivity measure while advances and bank size which are traditional bank metrics were key drivers of profits at HDFC bank. Managers at both banks and their share holders thus can look at these drivers to develop a broad understanding of profitability at the two banks.

Download or read book A Comparison of the Effects of Key Determinants on Share Prices of India s Largest Public and Private Sector Banks written by Rajveer Rawlin and published by . This book was released on 2016 with total page 12 pages. Available in PDF, EPUB and Kindle. Book excerpt: The banking sector in India has come under the scanner following some key changes in monetary policy. The recent quarterly reports of several banks have clearly showed a rise in non-performing assets (NPAs) and deteriorating asset quality. With the Reserve Bank of India (RBI) lowering interest rates following slower economic growth, bank share prices have risen sharply. The share price of banks is impacted by both internal and external factors. This paper is an attempt to compare the key drivers of the stock prices of India's largest public and private sector banks. Bank specific metrics were important drivers of profits at both banks. Risk factors such as gross and net NPAs and capital adequacy ratio were also important for both banks, suggesting that bank share price appreciation could come at the expense of asset quality. Productivity measures were key drivers of the stock price of India's largest public sector bank SBI, but had no effect on the share price of India's largest private sector bank, HDFC bank. Asset usage efficiency measures were key determinants of the share price of HDFC bank but not of SBI. The single most important determinant of the share price of SBI proved to be business per employee, a productivity measure while total assets and its key component advances along with deposits were key drivers of profits at HDFC bank. Managers at both banks and their shareholders thus can look at these drivers to develop a broad understanding of what influences stock prices of these two benchmark Indian banks.

Download or read book Determinants of Profitability of Listed Commercial Banks in India written by Rajveer Rawlin and published by GRIN Verlag. This book was released on 2019-12-09 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt: Doctoral Thesis / Dissertation from the year 2019 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1, Bharathiar University, language: English, abstract: This study seeks to understand the impact of a series of key internal determinants of the profitability of listed commercial banks in India. Following are the research questions raised in this regard: Are there differences in key performance measures of private and public sector banks? Does the size of the bank affect bank profitability? Does the bank’s lending activity and income generation capability affect its profitability? Does the productivity of the bank impact its profitability? Does the bank’s asset quality and capital adequacy affect its profitability? Can bank profitability be forecasted from determinants? The banking industry in India is diverse in nature. There are more than sixty listed commercial banks in India. These include banks in the public and private sector and the banks are of varying size and profitability levels. As noted early, the Indian banking system is faced with severe asset quality issues. The banking system has been flooded with non-performing assets which have significantly eroded the bank margins. Recent adverse developments in the banking sector such as lending scams and questionable advances to troubled segments of the economy have dominated the financial press. While this being so, this research is aimed at examining the contributing factors of profitability in banks. Key measures of bank profitability include the return of assets, return on equity and net interest margin. There are several possible drivers of bank profitability. These include asset quality, capital adequacy, liquidity, productivity and income. While several studies till date have looked at key determinants of bank profitability, very few studies have compared the effect of key determinants for a larger cross section of banks that represent the banking sector in India as a whole. Hence an attempt has been made in this study to know the key drivers of profitability of the banking sector. The study also looks at the similarities or the differences of the influence of selected determinants on profitability measures across the sample of banks selected for research. This study also compares the key drivers of bank profitability for public and private sector banks and an attempt is made to develop models to forecast bank profitability from key determinants.

Download or read book The Performance of Indian Banks During Financial Liberalization written by Ms.Petya Koeva Brooks and published by International Monetary Fund. This book was released on 2003-07-01 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides new empirical evidence on the impact of financial liberalization on the performance of Indian commercial banks. The analysis focuses on examining the behavior and determinants of bank intermediation costs and profitability during the liberalization period. The empirical results suggest that ownership type has a significant effect on some performance indicators and that the observed increase in competition during financial liberalization has been associated with lower intermediation costs and profitability of the Indian banks.

Download or read book The Determinants of Commercial Banks Profitability in India written by Nagaraju Thota and published by . This book was released on 2015 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using an unbalanced bank level panel data, this study tries to examine how bank-specific characteristics and macroeconomic factors affect the profitability of commercial banks (108 commercial banks) in India in the post reform period from 1999 to 2011. The results indicate that profitability of commercial banks in India, regardless of their ownership, is affected by both internal and external characteristics and changes in the overall banking environment. However, the study finds that the impact is not uniform across bank types. The results indicate that banks' liquidity conditions and size do not impact neither return on equity (ROE) or return on asset (ROA) of the profitability measure. On the other hand, it is found that profitability of private and foreign banks is positively related to their credit risk. The results indicate that overhead cost affects ROE of private and foreign banks positively while public sector banks negatively. Whereas the impact of overheads cost on ROA is positively significant in the case of all banks and negatively significant in the case of private banks. There exists a negative relationship between the level of capital strength and ROE and a positive relationship between the level capital strength and ROA in the case of all banks and public banks, which indicates that the more is the capital strength, the more is the profitability of these banks. The impact of Macroeconomic factors on ROE is insignificant for all cases with conflicting signs across ownership types of the banks. On the other hand on ROA, these indicators are significant when we pool the whole sample together (i.e. all banks) and private banks as a group.

Download or read book A Comparative Study on Banking Sector Profitability Credit Risk and Determinants in India and China written by Ulaganathan Subramanian and published by . This book was released on 2014 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper analyzes how bank characteristics and the overall financial environment affect the performance of banks in India and China. Utilizing bank level data, the study examines the performance indicators of banks in India and China during 1998-2009. A variety of internal and external banking characteristics are used to predict profitability. In the literature, bank profitability is usually expressed as a function of internal and external determinants. The internal determinants originate from bank accounts (balance sheets and/or profit and loss accounts) and therefore could be termed micro or bank-specific determinants of profitability. The external determinants are variables that are not related to bank management but reflect the economic and legal environment that affects the operation and performance of financial institutions. A number of explanatory variables have been proposed for both categories, according to the nature and purpose of study.

Download or read book Determinants of Public Sector Bank s Profitability in India written by Gurmeet Singh and published by . This book was released on 2016 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: The economic development of country depends on the effective banking system. In recent years, there have been considerable pressures on the profitability of banks. The study investigates the long run equilibrium relationship between the return on assets (ROA) and nine variables over the period 2005 to 2014. Johansen's co-integration test and vector error correction model have been applied to explore the long-run equilibrium relationship. The analysis reveals that the returns on assets of the Indian public sector banks are positively co-integrated with all the nine variables under the study and hence, a long-run equilibrium relationship exists between them. The results of VECM revels that secured advances to total advances, burden to total assets, burden to interest income, operating profits to total assets, non-interest income to total assets and profit per employee causes return on asset in long run and short run. While, non performing assets, deposits to total liabilities and net interest margins causes return on assets in short run only. The findings from Granger causality based on the VECM indicate bidirectional causality exists between all the variables tested and return on assets except non-performing assets. Non-performing assets granger causes return on assets but not the other way round.

Download or read book A Case of Comparative Study of Loan Performance in Selected Indian Private Banks written by P. Vohra and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The banking sector is the wheel of any economy. This sector is the most dominant sector of the financial system in India, with good valuations and increasing profits. After liberalization in 1991, the banking industry underwent major changes. Private Banks came into force, and now, they are playing a major role in the development of the Indian banking industry. In the process, they have jolted the public sector banks out of complacency and have forced them to become more competitive.The objective of present paper is to analyze the major component of the lending policy of the Indian private sector banks. This attempt also sheds light on a comparative study of financial performance between few selected private banks through their different lending options. In this attempt, the authors have just tried to emphasize the role of loan performance as a key agent in the profitability of private banks during the years 2002-2007.

Download or read book Public Sector Banks in India written by R. K. Raul and published by Gyan Publishing House. This book was released on 2005 with total page 332 pages. Available in PDF, EPUB and Kindle. Book excerpt: The present book examines the impact of Financial Reforms on the working of banking sector in general and Public Sector Banks in particular. In addition to assess multi-dimensional trend of banking sector, it examines the impact of Deregulation Policies on the Management of bank s resources. The book identifies many critical issues like determinants of Non-performing Assets, Profitability productivity of banks, mismatch of assets and liabilities and services rendered by banks particularly in the backward regions. The treatise embodies in it inter-intra banks and inter-intra regional, districts level variations. To encounter the objectives, appropriate hypothesis have been framed, statistical and financial techniques have been used to testify, the nature and problems of Public Sector vis-à-vis Private Sector and foreign banks. This book runs into ten chapters encompassing into different aspects of bank s performances with critical assessment in the context of reform package. The book will meet the growing interest of students, researchers, scholars, policymakers and general readers. It may be used as textbook for B.Com, B.B.A., M.B.A.; M.F.M. and M.A. (Eco.), M.Sc. (Eco.) courses.

Download or read book Deregulation and Efficiency of Indian Banks written by Sunil Kumar and published by Springer Science & Business Media. This book was released on 2013-10-23 with total page 340 pages. Available in PDF, EPUB and Kindle. Book excerpt: ​ The goal of this book is to assess the efficacy of India’s financial deregulation programme by analyzing the developments in cost efficiency and total factor productivity growth across different ownership types and size classes in the banking sector over the post-deregulation years. The work also gauges the impact of inclusion or exclusion of a proxy for non-traditional activities on the cost efficiency estimates for Indian banks, and ranking of distinct ownership groups. It also investigates the hitherto neglected aspect of the nature of returns-to-scale in the Indian banking industry. In addition, the work explores the key bank-specific factors that explain the inter-bank variations in efficiency and productivity growth. Overall, the empirical results of this work allow us to ascertain whether the gradualist approach to reforming the banking system in a developing economy like India has yielded the most significant policy goal of achieving efficiency and productivity gains. The authors believe that the findings of this book could give useful policy directions and suggestions to other developing economies that have embarked on a deregulation path or are contemplating doing so.

Download or read book Profitability Performance of Public Sector Commercial Banks in India written by Selvakumar Marimuthu and published by LAP Lambert Academic Publishing. This book was released on 2012-06 with total page 120 pages. Available in PDF, EPUB and Kindle. Book excerpt: In India, Commercial Banks are broadly divided into public sector, private sector and foreign banks. Public Sector Banks include the SBI and its associate banks numbering eight (8) besides nineteen (19) nationalised banks. Thus there are 28 public sector banks in India. The public sector commercial banks (PSCBs) have a wide network through out the country having large number of branches. It provides loans and advances to various categories of people under various schemes and these banks are very supportive to government for its development programs. In recent years, there have been considerable pressures on the profitability of banks. Profitability is considered as an index of financial health. Banks are urged to generate sufficient revenue to meet the rising cost of funds. Profitability is a key result area where performance and results directly and virtually affect the survival. Therefore, this study analyses the profitability performance of public sector commercial banks in India.

Download or read book Performance Appraisal of Public and New Private Sector Banks in India written by Reetu Kapoor and published by LAP Lambert Academic Publishing. This book was released on 2013 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Indian Banking Industry is going through a period of intense change where the global trends are affecting the banking business. The global financial crisis of 2008 has proved that India banking sector is robust and resilient. In this cut throat era of cyber age new vistas have been opened up for this sector. The study deals with a comprehensive evaluation of the Indian banks and examines the effect of reforms on the performance of the Indian Banking Industry. It covers the comparative growth, efficiency, productivity and profitability among giants of Indian banking sector i.e. public sector banks with the baby units of new generation banks i.e. new private sector banks with the post liberalization focus during the period of 1995-96 to 2007-08. This book portrays the performance of public sector and new private sector banks in India with the help of Data Envelopment Analysis (DEA), Herfindahl's Concentration Index and Profitability Indices. Multivariate Analysis has also been used to check the factors affecting the profitability of banks. This book is useful for academia as well as for economists, analysts and policy makers in the field of Commerce, Economics and Management.

Download or read book The Effect of Liquidity Management on Profitability written by Shweta Mehrotra and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper makes an attempt to study the effect of liquidity management on the profitability of public and private sector banks in India. For this purpose, 27 public sector banks and 20 private sector banks have been considered for the periods 2011-12 and 2015-16. Cash-Deposit Ratio (CDR), Credit-Deposit Ratio (CRDR) and Investment-Deposit Ratio (IDR) have been used as independent variables to denote the liquidity management of the banks, while Return on Assets (ROA) and Return on Equity (ROE) have been used as proxy variables for the profitability of the banks. It is found that there is a significant negative effect of CDR and IDR on ROA. However, in the case of ROE, it is found that there is no significant relationship between banks' profitability and liquidity taking all the variables into consideration, irrespective of the type or form of commercial banks in India. This leads to the conclusion that the commercial banks can focus on increasing their profitability without affecting their liquidity and vice versa.

Download or read book A Comparison of Credit Risk Management in Private and Public Banks in India written by Isaiah Oino and published by . This book was released on 2016 with total page 14 pages. Available in PDF, EPUB and Kindle. Book excerpt: Like other corporations, banks want to create value and seek ways to control risk while aiming to enhance productivity and performance. This is achieved by granting credits to customers from the money deposited by the depositor, thus placing them at risk in the case of defaulting. Despite this risk, banks must continually issue credit since it is the key source of its profitability. This research study assesses the impact of credit risk management on Indian public and private banks during the 2009-2012 period. Using pooled OLS, fixed effects and random effects, the study examines credit risk management in seven private banks and seven public banks. The results show that private banks are more capitalized and more profitable than public banks. In addition, in both cases asset quality measured using non-performing assets with negative coefficients significantly influenced bank profitability. The study extrapolates the importance of regulatory capital and the importance of risk management in ensuring stability in the financial industry.

Download or read book Determinants of Commercial Bank Interest Margins and Profitability written by Asl? Demirgüç-Kunt and published by World Bank Publications. This book was released on 1998 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: March 1998 Differences in interest margins reflect differences in bank characteristics, macroeconomic conditions, existing financial structure and taxation, regulation, and other institutional factors. Using bank data for 80 countries for 1988-95, Demirgüç-Kunt and Huizinga show that differences in interest margins and bank profitability reflect various determinants: * Bank characteristics. * Macroeconomic conditions. * Explicit and implicit bank taxes. * Regulation of deposit insurance. * General financial structure. * Several underlying legal and institutional indicators. Controlling for differences in bank activity, leverage, and the macroeconomic environment, they find (among other things) that: * Banks in countries with a more competitive banking sector-where banking assets constitute a larger share of GDP-have smaller margins and are less profitable. The bank concentration ratio also affects bank profitability; larger banks tend to have higher margins. * Well-capitalized banks have higher net interest margins and are more profitable. This is consistent with the fact that banks with higher capital ratios have a lower cost of funding because of lower prospective bankruptcy costs. * Differences in a bank's activity mix affect spread and profitability. Banks with relatively high noninterest-earning assets are less profitable. Also, banks that rely largely on deposits for their funding are less profitable, as deposits require more branching and other expenses. Similarly, variations in overhead and other operating costs are reflected in variations in bank interest margins, as banks pass their operating costs (including the corporate tax burden) on to their depositors and lenders. * In developing countries foreign banks have greater margins and profits than domestic banks. In industrial countries, the opposite is true. * Macroeconomic factors also explain variation in interest margins. Inflation is associated with higher realized interest margins and greater profitability. Inflation brings higher costs-more transactions and generally more extensive branch networks-and also more income from bank float. Bank income increases more with inflation than bank costs do. * There is evidence that the corporate tax burden is fully passed on to bank customers in poor and rich countries alike. * Legal and institutional differences matter. Indicators of better contract enforcement, efficiency in the legal system, and lack of corruption are associated with lower realized interest margins and lower profitability. This paper-a product of the Development Research Group-is part of a larger effort in the group to study bank efficiency.

Download or read book Efficiency and Profitability of Public and Private Sector Banks in India written by Ravi Inder Singh and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the inter-bank relative efficiency of public and private sector commercial banks in India. This study includes analysis of slacks which remain to be explored for getting a clear picture about the causes of inefficiency. Though the issue is important, no recent study, to the best of our knowledge, has addressed it. Data Envelopment Analysis (DEA) approach has been used to examine the efficiency level achieved and to identify the slacks. The results reveal that private (Indian) sector banks are relatively more efficient compared to public sector banks. It was found that State Bank of Hyderabad, Bank of Maharashtra, Central Bank of India, United Bank of India, Dhanlaxmi Bank and ING Vysya could not achieve 100% efficiency even in a single year, whereas the Federal Bank, HDFC Bank, Kotak Mahindra Bank, Nainital Bank and Yes Bank Ltd., all private sector banks, achieved full efficiency in all the ten years. The strategies suggested in this study to the comparatively less efficient banks would help them not only in improving their efficiency, but also in lowering the cost of their products for the overall benefit of their customers. Efficiency is also found to be directly affecting the profitability of banks.

Download or read book Profitability in Public Sector Banks written by Umesh Charan Patnaik and published by . This book was released on 2005-01-01 with total page 310 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is designed exclusively for the community which has greater interest in evaluating the performance of banking organizations. The book has laid emphasis on the analysis of profitability of Public Sector Banks in general and State Bank of India in particular. In the process of analysis, latest data relating to the key indicators of profitability of different banking groups have been incorporated to exhibit the trend percentages and ratios for a period of one decade i.e 1992-93 to 2001-02. The basic objectives behind the preparation of this book are: