This document summarizes a study that measures the operational efficiency of public sector banks in India. It analyzes factors that influence banks' profitability using regression analysis. The study finds that non-performing assets, total income, total expenses, and net interest margin are significant factors. It also uses data envelopment analysis to benchmark the relative efficiency of 21 public sector banks over 5 years. The results show that return on assets, net interest margin, non-performing loans, cost-to-income ratio, advances to deposits ratio, and capital adequacy ratio influence banks' profitability.
The profitability of commercial banks is influenced by a number of internal and external factors. This paper attempts to identify the internal factors which significantly influence the profitability of commercial banks in Bangladesh. In this study, profitability is measured by ROA and ROE which may be significantly influenced by the internal factors such as IRS, NIM, CAR, CR, DG, LD, CTI and SIZE of the bank. Data are collected from published annual reports during 2014--2018 of 23 commercial banks. Using simple regression model, it is found that CR has significant effect on the profitability and CAR has significant influence on ROA only. In addition to this, DG has significant effects on PCBs’ profitability (ROE only) where as IRS and CTI have significant influence on profitability (ROA only) of ICBs. Further, none of these variables have significant effects on the profitability of SCBs but CAR and CR are correlated with profitability (ROA only) and the causes may be the nature of services provided by SCBs to its clients. The internal policy makers should manage the influential internal factors of the banks in order to increase their profitability so that they can meet stakeholders’ expectations.
A Comparison of Key Determinants on Profitability of India’s Largest Public a...Rajveer Rawlin
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.
A nexus between liquidity & profitability a study of trading companies in sri...Alexander Decker
This document summarizes a study that investigated the relationship between liquidity and profitability of trading companies in Sri Lanka. The study analyzed annual report data from 8 listed trading companies over a 5-year period from 2008 to 2012. Correlation and regression analyses were used to examine the nature and extent of the relationship between liquidity ratios like current ratio and quick ratio and profitability ratios like return on equity and return on assets. The findings suggest there is a significant relationship between liquidity and profitability among the sampled trading companies in Sri Lanka. However, the results may not be generalizable to non-public companies or other sectors. The document provides background on liquidity, profitability, prior studies on the relationship, and the methodology used
Assessing the effect of liquidity on profitability of commercial banks in kenyaAlexander Decker
This document discusses factors that affect the profitability of commercial banks in Kenya. It provides background on the banking sector in Kenya and reviews various theories on factors that influence bank profitability, including market power theory, efficiency structure theory, and the Modigliani-Miller theorem. The study aimed to determine the effect of internal factors like liquidity on the profitability of commercial banks in Kenya. It found that liquidity has a statistically significant and positive relationship with bank profitability.
Financial literacy for Mutual Fund Investment: An extensive study on investor...AI Publications
Peoples are always intending to invest their savings for several security purposes, but the crucial matter of concern is that where they are investing. Thinking of such investment options, capital market is a superior alternative all the time. Panic due to lack of financial knowledge about that market acts as crucial parameter in becoming the people’s choice of investment. After went over a myriad of investment choices, mutual fund would be a secure platform to invest. The main purpose of this study is to get an overview about the financial literacy level of Bangladeshi investors who invest in mutual fund and trying to assess the implication of financial literacy on investment intension. Data were collected with the help of online survey method from primary sources on the basis of a well-structured questionnaire where convenient sampling is applicable due to focus on mutual fund investors. Respondents’ financial knowledge level is evaluated by asking eleven specific questions on varied financial concepts following the G20 survey of OECD and investment intention is measured by Ajzen’s conceptual and methodological framework. Based on the descriptive statistics, Correlation is used to analyze the collected primary data. Some significant findings are uncovered like Bangladeshi investors belong to low literacy level. Study also indicates a negligible inverse relationship between financial literacy level and investment intention of investors which in turn stimulate existing investors to recommend others to invest in mutual fund due to low literacy level. So it is profound that low literate investors can be a vital key to promote mutual fund and enrich financial market of Bangladesh.
This document summarizes a research study that examined the influence of firm size on the financial performance of deposit money banks quoted on the Nigerian stock exchange from 2005 to 2016. The study used a sample of 5 banks and measured firm size as the log of total assets and financial performance as return on assets. Descriptive statistics and correlation analysis were conducted. The results of the regression analyses showed that firm size had an insignificant negative influence on financial performance, indicating diseconomies of scale. The study recommends that banks minimize expansion costs and maximize economies of scale to stimulate financial performance.
Effect of pricing strategies on customer retention among small scale metal me...AI Publications
This document summarizes a research article that examined the effect of pricing strategies on customer retention among small-scale metal mechanics and fabricators in Mwanza City, Tanzania. The study investigated three pricing strategies: value-based pricing, competition-based pricing, and cost-based pricing. A survey of 228 small-scale metalworkers and interviews with 7 owners found that the adoption of value-based, competition-based, and cost-based pricing strategies had a significant impact on customer retention. The small-scale businesses were found to use these pricing strategies interchangeably depending on market conditions.
Measuring Technical and Scale Efficiency of Banks in India Using DEAiosrjce
This document summarizes a study that uses Data Envelopment Analysis (DEA) to measure the technical and scale efficiency of commercial banks in India from 2006 to 2010. Two DEA models, the CCR and BCC models, are used to estimate technical and scale efficiency. The results indicate that deregulation of the banking sector has led to an increase in efficiency over time. Private sector banks performed better than public sector banks during this period. The source of inefficiency was mainly due to scale rather than pure technical inefficiency.
The profitability of commercial banks is influenced by a number of internal and external factors. This paper attempts to identify the internal factors which significantly influence the profitability of commercial banks in Bangladesh. In this study, profitability is measured by ROA and ROE which may be significantly influenced by the internal factors such as IRS, NIM, CAR, CR, DG, LD, CTI and SIZE of the bank. Data are collected from published annual reports during 2014--2018 of 23 commercial banks. Using simple regression model, it is found that CR has significant effect on the profitability and CAR has significant influence on ROA only. In addition to this, DG has significant effects on PCBs’ profitability (ROE only) where as IRS and CTI have significant influence on profitability (ROA only) of ICBs. Further, none of these variables have significant effects on the profitability of SCBs but CAR and CR are correlated with profitability (ROA only) and the causes may be the nature of services provided by SCBs to its clients. The internal policy makers should manage the influential internal factors of the banks in order to increase their profitability so that they can meet stakeholders’ expectations.
A Comparison of Key Determinants on Profitability of India’s Largest Public a...Rajveer Rawlin
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.
A nexus between liquidity & profitability a study of trading companies in sri...Alexander Decker
This document summarizes a study that investigated the relationship between liquidity and profitability of trading companies in Sri Lanka. The study analyzed annual report data from 8 listed trading companies over a 5-year period from 2008 to 2012. Correlation and regression analyses were used to examine the nature and extent of the relationship between liquidity ratios like current ratio and quick ratio and profitability ratios like return on equity and return on assets. The findings suggest there is a significant relationship between liquidity and profitability among the sampled trading companies in Sri Lanka. However, the results may not be generalizable to non-public companies or other sectors. The document provides background on liquidity, profitability, prior studies on the relationship, and the methodology used
Assessing the effect of liquidity on profitability of commercial banks in kenyaAlexander Decker
This document discusses factors that affect the profitability of commercial banks in Kenya. It provides background on the banking sector in Kenya and reviews various theories on factors that influence bank profitability, including market power theory, efficiency structure theory, and the Modigliani-Miller theorem. The study aimed to determine the effect of internal factors like liquidity on the profitability of commercial banks in Kenya. It found that liquidity has a statistically significant and positive relationship with bank profitability.
Financial literacy for Mutual Fund Investment: An extensive study on investor...AI Publications
Peoples are always intending to invest their savings for several security purposes, but the crucial matter of concern is that where they are investing. Thinking of such investment options, capital market is a superior alternative all the time. Panic due to lack of financial knowledge about that market acts as crucial parameter in becoming the people’s choice of investment. After went over a myriad of investment choices, mutual fund would be a secure platform to invest. The main purpose of this study is to get an overview about the financial literacy level of Bangladeshi investors who invest in mutual fund and trying to assess the implication of financial literacy on investment intension. Data were collected with the help of online survey method from primary sources on the basis of a well-structured questionnaire where convenient sampling is applicable due to focus on mutual fund investors. Respondents’ financial knowledge level is evaluated by asking eleven specific questions on varied financial concepts following the G20 survey of OECD and investment intention is measured by Ajzen’s conceptual and methodological framework. Based on the descriptive statistics, Correlation is used to analyze the collected primary data. Some significant findings are uncovered like Bangladeshi investors belong to low literacy level. Study also indicates a negligible inverse relationship between financial literacy level and investment intention of investors which in turn stimulate existing investors to recommend others to invest in mutual fund due to low literacy level. So it is profound that low literate investors can be a vital key to promote mutual fund and enrich financial market of Bangladesh.
This document summarizes a research study that examined the influence of firm size on the financial performance of deposit money banks quoted on the Nigerian stock exchange from 2005 to 2016. The study used a sample of 5 banks and measured firm size as the log of total assets and financial performance as return on assets. Descriptive statistics and correlation analysis were conducted. The results of the regression analyses showed that firm size had an insignificant negative influence on financial performance, indicating diseconomies of scale. The study recommends that banks minimize expansion costs and maximize economies of scale to stimulate financial performance.
Effect of pricing strategies on customer retention among small scale metal me...AI Publications
This document summarizes a research article that examined the effect of pricing strategies on customer retention among small-scale metal mechanics and fabricators in Mwanza City, Tanzania. The study investigated three pricing strategies: value-based pricing, competition-based pricing, and cost-based pricing. A survey of 228 small-scale metalworkers and interviews with 7 owners found that the adoption of value-based, competition-based, and cost-based pricing strategies had a significant impact on customer retention. The small-scale businesses were found to use these pricing strategies interchangeably depending on market conditions.
Measuring Technical and Scale Efficiency of Banks in India Using DEAiosrjce
This document summarizes a study that uses Data Envelopment Analysis (DEA) to measure the technical and scale efficiency of commercial banks in India from 2006 to 2010. Two DEA models, the CCR and BCC models, are used to estimate technical and scale efficiency. The results indicate that deregulation of the banking sector has led to an increase in efficiency over time. Private sector banks performed better than public sector banks during this period. The source of inefficiency was mainly due to scale rather than pure technical inefficiency.
Determinants of Banks’ Financial Performance: A Comparative Study between Nat...inventionjournals
Financial performance is one of the most critical factors having impact on the decision making of the resource providers. And thus to ensure the existence in the ever growing competitive business environment, every institution should be more concerned about the factors affecting their financial performance. This paper specially focuses on identifying the factors having impact on the financial performance of the commercial banks operating in Bangladesh. An effort has also been exerted to determine whether the extent of influence of various factors on financial performance varies with respect to local private and nationalized commercial banks. For this purpose 10 local private commercial banks (PCB) and all nationalized commercial banks (NCB) have been taken covering the period from 2008-2014. Here, data has been collected from the annual reports of the banks under consideration. To draw conclusion a multiple regression has been run by considering financial performance (profitability) as dependent variable and operating efficiency, asset utilization , liquidity, credit risk, capital adequacy and size of the company as independent variables. The study finds that asset utilization and operating efficiency have significant positive impact on banks' financial performance (profitability) whereas credit risk has significant negative impact. However, for PCBs asset utilization is the most critical factor to performance. On the other hand, result shows that in case of NCB 1 taka increase in credit risk is responsible for negative return of 0.968 taka. It is found that financial performance has no significant relationship with size and liquidity of the banks
Firm level determinants to small and medium sized enterprises’ access to fina...rrpidani
Firm Level Determinants to Small and Medium-Sized Enterprises’ Access to Financing in Indonesia by Rita Pidani and Ishak Balaka. Academy of Taiwan Business Management Review, April 2013, Volume 9, Number 1, pp. 117-126.
How corporate diversification affects excess value and excess profitabilityAlexander Decker
This document summarizes a study that examined the relationship between excess value and excess profitability among deposit money banks in Nigeria from 1998-2007. The study used regression and correlation analyses of accounting data from 18 sampled banks. The analyses revealed a positive and statistically significant correlation, indicating a relationship between excess value and excess profitability for both diversified and standalone banks. Prior literature on the costs and benefits of corporate diversification was reviewed. The study aimed to measure this relationship for Nigerian banks and hypothesized no significant relationship, which the analyses did not support.
A Dissertation Report On "Study Of Net Interest Margin {NIM} Of Selected INDIAN Public & Private Sector Banks"
Has Undertaken 10 Years Financial Data Of Selected Banks i.e. 2008-2017 for the Study.
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Relationship between capital structure and firm’s performance theoretical reviewAlexander Decker
This document provides a theoretical review of the relationship between capital structure and firm performance. It begins by defining capital structure as the combination of debt and equity used to finance a firm's operations. The document then discusses the main determinants of capital structure, including both internal factors like firm size, growth, and profitability, as well as external macroeconomic variables. Finally, it outlines the major theories around capital structure and their views on the relationship with firm performance and value.
This document analyzes the relative efficiency of 80 banks in India from 2008 to 2010 using data envelopment analysis (DEA). It finds that:
1) Foreign banks have the highest average efficiency score of 0.96, followed by private banks (0.77), and public sector banks (0.74).
2) When analyzed separately by sector, public sector banks have the highest average efficiency (0.96), followed by private banks (0.94), and foreign banks (0.90).
3) Higher costs of deposits and lower returns on investments and loans contribute most to public and private bank inefficiencies relative to foreign banks. Reducing non-performing assets could improve public bank efficiency over
Predicting Corporate Failure - An Application of Discriminate Analysisscmsnoida5
Corporate failure is a serious problem being
confronted by the corporate world. This issue
has been a subject of intensive research and
discussion by economists, bankers, creditors,
equity shareholders, accountants, marketing
and management experts. The present study
aims at developing a model for prediction
of corporate failure on the basis of financial
ratios. The study is based on the data of
selected firms from chemical industry (with
equal number of failed and non failed firms).
The discriminant analysis has been used to
discriminate between failed and non failed
firms. It is concluded that some of the
financial ratios can significantly differentiate
between failed and non failed firms. The
finding will be useful for the banks and other
financial institutions in designing a suitable
credit appraisal and monitoring system for their
loans. This model could guide the policy makers
to prepare an early warning system to avoid
bankruptcy.
This document provides an overview of public sector undertakings (PSUs) in India. It discusses that PSUs are government-owned companies that play an important role in India's economy. The document then covers several key topics regarding PSUs, including the financial management challenges they face, the role of financial advisors, examples of major PSUs, and reforms around disinvestment and increasing transparency. It analyzes issues like managing risks and growth in the changing banking environment in India. Overall, the document presents an introduction to PSUs and examines their operations, importance, and ongoing development.
An Impact of Capital Adequacy Ratio on the Profitability of Private Sector Ba...Dr. Amarjeet Singh
Profitability being one of the cardinal principles of bank lending acts as a game changer for the survival and success of private sector banks in India. In order to stay profitable, banks have to capitalise on every penny advanced to yield the expected returns. However, considering the constraints laid down by the Reserve Bank of India, banks have to maintain a minimum capital adequacy ratio, as per the current BASEL III regulations active in India. With the mergers of public sector banks, the challenge has got just tougher for the private sector banks in India. Expansion and Diversification are the key strategies adopted by the key players from the private banking sector, however, with the minimum capital adequacy ratio observed by them, it is necessary to understand its actual impact on the bank’s profitability. This research paper aims to throw light upon the linkage that capital adequacy has with the bank’s profitability. It attempts to establish a relation between the Capital Adequacy Ratio with the Net profits of the bank. For the purpose of this study, data from the past 5 years of the leading private sector banks has been collected, namely, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, AXIS Bank and YES Bank. The collected data has been analysed using Pearson’s Correlation to establish a relation between the CAR Ratio & the bank’s profitability. Hypothesis testing has been further done to study the quantum of proportionate change in the profitability with a change in the CAR Ratio for private sector banks using applicable research tools. The said research tools are applied to achieve the desired results while maintaining the required quantum of accuracy. It also aims to understand the proportionate impact of changes in CAR to the bank’s profitability, which can act as a suggested measure for banks to develop a reliable framework for efficient capital management and increase overall efficiency. The results derived from the data collected and analyzed aim to provide scope for further study on the subject matter.
This document summarizes a research article that examines factors affecting going concern audit opinions. The study analyzed 141 companies listed on the Indonesia Stock Exchange from 2012-2014. The results of the logistic regression analysis found that audit quality, company size, and managerial ownership affected the likelihood of a going concern audit opinion. However, the previous year's audit opinion, institutional ownership, growth, debt default, opinion shopping, bankruptcy prediction, audit committee activity, and audit committee membership did not affect the likelihood of a going concern audit opinion. The purpose of the study was to determine what factors influence the issuance of a going concern audit opinion for manufacturing companies listed on the Indonesia Stock Exchange.
Intellectual capital: A modern model to measure the value creation in a businessAI Publications
Using a sample of 92 patients, this study looked into the impact of intellectual capital on the efficiency of private hospitals. The researchers used a quantitative approach to assess the effect of Intellectual capital (Human capital, Structural capital, and Relational capital) on long-term competitive advantage in private hospitals in Iraq's Kurdistan region. The research sample was selected using a random sampling method and conducted in various locations across Iraq's Kurdistan province. A total of 110 questionnaires were distributed, but only 92 people correctly completed them. The findings revealed that the most effective relationship with firm success was between human capital as an element of Intellectual capital, while the least effective relationship was between ownership as an element of Intellectual capital. Furthermore, our findings indicate that finance managers should use debts as a last resort in terms of intellectual capital. Finally, our research can be improved by using more controlled variables, a greater sample size, and data from a longer time span in the regression models. Other methods and steps can be used as well.
This study aims to find the efficiency of selected Kenyan sample commercial banks. As the
banking industry is the main sector that contributes significantly to the development of the
national economy and hence the efficiency of commercial banks gains significantly. The analysis
of the study, using intermediation approach, reveals the efficiency of Kenyan commercial
banks. However, the efficiency of sample banks showed inefficiency in some areas during the
study period. But small banks showed better efficiency scores during the study period.
Impact of Web Advertisement on Customers Perception - A Case of Banking Sectorscmsnoida5
Nowadays a lot of innovative services are
offered by the financial service providers to their
customers. The use of more innovation in the
financial sector is the resultant of the day by day
advancement in the technology. Also customer
of today is well aware of the latest technology
and they demand their providers to execute
the technology for business prospective. Target
of all financial service providers’ advertisers
is to reach maximum customers. For this they
utilize every promotional and advertisement
channel so as to reach and inform maximum
public about their products. The purpose of
present study is to determine impact of web
advertisement on customer perception in case of
banking sector. The data will be collected from
200 approx respondents who are aware of the
web advertisements. The collected data will be
put in the Statistical Package for Social Sciences
(SPSS). Afterwards the regression analysis and
correlation analysis will be applied in order to
determine the impact of the web advertisement
on the purchase intention of the customers in
regards to the banking and investment products.
Corporate Governance Practices of Indian Public Sector and Private Sector Ban...scmsnoida5
This study examines the differences in corporate governance practices between public sector banks and private sector banks in India. An assessment tool called the Corporate Governance Disclosure Index (CGDI) was used to analyze annual reports from 2002-2014 of top public and private sector banks. Statistical analysis found some significant differences between the two sectors. Private banks had stronger practices related to board structure and remuneration committees. Both sectors differed significantly in adopting non-mandatory recommendations, with private banks exceeding in compliance. However, there were no major differences found regarding transparency/disclosure practices and shareholders' rights. The study aims to compare governance quality between Indian public and private banks.
11.parameters of conventional and islamic bank抯 profitability in pakistanAlexander Decker
This document summarizes a research study that analyzed the key determinants of profitability for conventional and Islamic banks in Pakistan from 2006-2010. The study used regression analysis to evaluate the relationship between various internal bank characteristics and profitability, as measured by return on assets. The results found that total assets had a negative relationship with profitability, suggesting larger banks may have lower efficiency. Total equity and deposits both had a positive relationship with profitability. The study concluded that major internal factors like assets, capital, loans, and deposits influence bank profitability in Pakistan.
11.[11 18]parameters of conventional and islamic bank抯 profitability in pa...Alexander Decker
This document summarizes a research study that analyzed the key determinants of profitability for conventional and Islamic banks in Pakistan from 2006-2010. The study used regression analysis to evaluate the relationship between various internal bank characteristics and profitability, as measured by return on assets. The results found that total assets had a negative relationship with profitability, suggesting larger banks may have lower efficiency. Total equity and deposits both had a positive relationship with profitability. The study concluded that major internal factors like assets, capital, loans, and deposits influence bank profitability in Pakistan.
Liquidity, capital adequacy and operating efficiency of commercial banks in k...Alexander Decker
This document summarizes a research journal article that examines the effect of liquidity and capital adequacy on the operating efficiency of commercial banks in Kenya. Specifically, it analyzes how bank liquidity ratios and capital adequacy ratios impact operational efficiency. The study found that the previous year's operational efficiency, liquid assets to short-term liabilities ratio, and total capital ratio positively and significantly affect bank operating efficiency. Regression analysis showed that 41.08% of banks' operational efficiency is explained by the study variables. Therefore, banks should focus on improving liquidity ratios and capital ratios to enhance operating efficiency.
This document contains details of a student project analyzing the financial statements of the top 3 Indian banks - SBI, ICICI, and PNB. It includes the student's name, roll number, project title, subject area, and guide's name. The project involves calculating and comparing various ratios such as profitability, leverage, payout, and liquidity ratios across the three banks. The objectives are to assess the banks' profitability, do comparative analysis between banks, and evaluate operational efficiency. The introduction provides background on banks' role in the economy. The literature review discusses previous research on analyzing banks' financial performance.
A study on effect of liquidity management on profitability with select privat...Supriya Mondal
This document provides background information and a literature review for a study on the relationship between liquidity and profitability in select public and private sector banks in India. It begins with an introduction to the topic, outlining the trade-off between liquidity and profitability for banks. It then reviews 10 previous research papers on similar topics, analyzing factors like liquidity ratios, efficiency, and performance comparisons between public and private sector banks. The reviewed papers examine issues like the effect of liquidity on profitability, comparing liquidity positions between bank types, and evaluating banks' financial health using the CAMEL model.
Determinants of Banks’ Financial Performance: A Comparative Study between Nat...inventionjournals
Financial performance is one of the most critical factors having impact on the decision making of the resource providers. And thus to ensure the existence in the ever growing competitive business environment, every institution should be more concerned about the factors affecting their financial performance. This paper specially focuses on identifying the factors having impact on the financial performance of the commercial banks operating in Bangladesh. An effort has also been exerted to determine whether the extent of influence of various factors on financial performance varies with respect to local private and nationalized commercial banks. For this purpose 10 local private commercial banks (PCB) and all nationalized commercial banks (NCB) have been taken covering the period from 2008-2014. Here, data has been collected from the annual reports of the banks under consideration. To draw conclusion a multiple regression has been run by considering financial performance (profitability) as dependent variable and operating efficiency, asset utilization , liquidity, credit risk, capital adequacy and size of the company as independent variables. The study finds that asset utilization and operating efficiency have significant positive impact on banks' financial performance (profitability) whereas credit risk has significant negative impact. However, for PCBs asset utilization is the most critical factor to performance. On the other hand, result shows that in case of NCB 1 taka increase in credit risk is responsible for negative return of 0.968 taka. It is found that financial performance has no significant relationship with size and liquidity of the banks
Firm level determinants to small and medium sized enterprises’ access to fina...rrpidani
Firm Level Determinants to Small and Medium-Sized Enterprises’ Access to Financing in Indonesia by Rita Pidani and Ishak Balaka. Academy of Taiwan Business Management Review, April 2013, Volume 9, Number 1, pp. 117-126.
How corporate diversification affects excess value and excess profitabilityAlexander Decker
This document summarizes a study that examined the relationship between excess value and excess profitability among deposit money banks in Nigeria from 1998-2007. The study used regression and correlation analyses of accounting data from 18 sampled banks. The analyses revealed a positive and statistically significant correlation, indicating a relationship between excess value and excess profitability for both diversified and standalone banks. Prior literature on the costs and benefits of corporate diversification was reviewed. The study aimed to measure this relationship for Nigerian banks and hypothesized no significant relationship, which the analyses did not support.
A Dissertation Report On "Study Of Net Interest Margin {NIM} Of Selected INDIAN Public & Private Sector Banks"
Has Undertaken 10 Years Financial Data Of Selected Banks i.e. 2008-2017 for the Study.
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Relationship between capital structure and firm’s performance theoretical reviewAlexander Decker
This document provides a theoretical review of the relationship between capital structure and firm performance. It begins by defining capital structure as the combination of debt and equity used to finance a firm's operations. The document then discusses the main determinants of capital structure, including both internal factors like firm size, growth, and profitability, as well as external macroeconomic variables. Finally, it outlines the major theories around capital structure and their views on the relationship with firm performance and value.
This document analyzes the relative efficiency of 80 banks in India from 2008 to 2010 using data envelopment analysis (DEA). It finds that:
1) Foreign banks have the highest average efficiency score of 0.96, followed by private banks (0.77), and public sector banks (0.74).
2) When analyzed separately by sector, public sector banks have the highest average efficiency (0.96), followed by private banks (0.94), and foreign banks (0.90).
3) Higher costs of deposits and lower returns on investments and loans contribute most to public and private bank inefficiencies relative to foreign banks. Reducing non-performing assets could improve public bank efficiency over
Predicting Corporate Failure - An Application of Discriminate Analysisscmsnoida5
Corporate failure is a serious problem being
confronted by the corporate world. This issue
has been a subject of intensive research and
discussion by economists, bankers, creditors,
equity shareholders, accountants, marketing
and management experts. The present study
aims at developing a model for prediction
of corporate failure on the basis of financial
ratios. The study is based on the data of
selected firms from chemical industry (with
equal number of failed and non failed firms).
The discriminant analysis has been used to
discriminate between failed and non failed
firms. It is concluded that some of the
financial ratios can significantly differentiate
between failed and non failed firms. The
finding will be useful for the banks and other
financial institutions in designing a suitable
credit appraisal and monitoring system for their
loans. This model could guide the policy makers
to prepare an early warning system to avoid
bankruptcy.
This document provides an overview of public sector undertakings (PSUs) in India. It discusses that PSUs are government-owned companies that play an important role in India's economy. The document then covers several key topics regarding PSUs, including the financial management challenges they face, the role of financial advisors, examples of major PSUs, and reforms around disinvestment and increasing transparency. It analyzes issues like managing risks and growth in the changing banking environment in India. Overall, the document presents an introduction to PSUs and examines their operations, importance, and ongoing development.
An Impact of Capital Adequacy Ratio on the Profitability of Private Sector Ba...Dr. Amarjeet Singh
Profitability being one of the cardinal principles of bank lending acts as a game changer for the survival and success of private sector banks in India. In order to stay profitable, banks have to capitalise on every penny advanced to yield the expected returns. However, considering the constraints laid down by the Reserve Bank of India, banks have to maintain a minimum capital adequacy ratio, as per the current BASEL III regulations active in India. With the mergers of public sector banks, the challenge has got just tougher for the private sector banks in India. Expansion and Diversification are the key strategies adopted by the key players from the private banking sector, however, with the minimum capital adequacy ratio observed by them, it is necessary to understand its actual impact on the bank’s profitability. This research paper aims to throw light upon the linkage that capital adequacy has with the bank’s profitability. It attempts to establish a relation between the Capital Adequacy Ratio with the Net profits of the bank. For the purpose of this study, data from the past 5 years of the leading private sector banks has been collected, namely, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, AXIS Bank and YES Bank. The collected data has been analysed using Pearson’s Correlation to establish a relation between the CAR Ratio & the bank’s profitability. Hypothesis testing has been further done to study the quantum of proportionate change in the profitability with a change in the CAR Ratio for private sector banks using applicable research tools. The said research tools are applied to achieve the desired results while maintaining the required quantum of accuracy. It also aims to understand the proportionate impact of changes in CAR to the bank’s profitability, which can act as a suggested measure for banks to develop a reliable framework for efficient capital management and increase overall efficiency. The results derived from the data collected and analyzed aim to provide scope for further study on the subject matter.
This document summarizes a research article that examines factors affecting going concern audit opinions. The study analyzed 141 companies listed on the Indonesia Stock Exchange from 2012-2014. The results of the logistic regression analysis found that audit quality, company size, and managerial ownership affected the likelihood of a going concern audit opinion. However, the previous year's audit opinion, institutional ownership, growth, debt default, opinion shopping, bankruptcy prediction, audit committee activity, and audit committee membership did not affect the likelihood of a going concern audit opinion. The purpose of the study was to determine what factors influence the issuance of a going concern audit opinion for manufacturing companies listed on the Indonesia Stock Exchange.
Intellectual capital: A modern model to measure the value creation in a businessAI Publications
Using a sample of 92 patients, this study looked into the impact of intellectual capital on the efficiency of private hospitals. The researchers used a quantitative approach to assess the effect of Intellectual capital (Human capital, Structural capital, and Relational capital) on long-term competitive advantage in private hospitals in Iraq's Kurdistan region. The research sample was selected using a random sampling method and conducted in various locations across Iraq's Kurdistan province. A total of 110 questionnaires were distributed, but only 92 people correctly completed them. The findings revealed that the most effective relationship with firm success was between human capital as an element of Intellectual capital, while the least effective relationship was between ownership as an element of Intellectual capital. Furthermore, our findings indicate that finance managers should use debts as a last resort in terms of intellectual capital. Finally, our research can be improved by using more controlled variables, a greater sample size, and data from a longer time span in the regression models. Other methods and steps can be used as well.
This study aims to find the efficiency of selected Kenyan sample commercial banks. As the
banking industry is the main sector that contributes significantly to the development of the
national economy and hence the efficiency of commercial banks gains significantly. The analysis
of the study, using intermediation approach, reveals the efficiency of Kenyan commercial
banks. However, the efficiency of sample banks showed inefficiency in some areas during the
study period. But small banks showed better efficiency scores during the study period.
Impact of Web Advertisement on Customers Perception - A Case of Banking Sectorscmsnoida5
Nowadays a lot of innovative services are
offered by the financial service providers to their
customers. The use of more innovation in the
financial sector is the resultant of the day by day
advancement in the technology. Also customer
of today is well aware of the latest technology
and they demand their providers to execute
the technology for business prospective. Target
of all financial service providers’ advertisers
is to reach maximum customers. For this they
utilize every promotional and advertisement
channel so as to reach and inform maximum
public about their products. The purpose of
present study is to determine impact of web
advertisement on customer perception in case of
banking sector. The data will be collected from
200 approx respondents who are aware of the
web advertisements. The collected data will be
put in the Statistical Package for Social Sciences
(SPSS). Afterwards the regression analysis and
correlation analysis will be applied in order to
determine the impact of the web advertisement
on the purchase intention of the customers in
regards to the banking and investment products.
Corporate Governance Practices of Indian Public Sector and Private Sector Ban...scmsnoida5
This study examines the differences in corporate governance practices between public sector banks and private sector banks in India. An assessment tool called the Corporate Governance Disclosure Index (CGDI) was used to analyze annual reports from 2002-2014 of top public and private sector banks. Statistical analysis found some significant differences between the two sectors. Private banks had stronger practices related to board structure and remuneration committees. Both sectors differed significantly in adopting non-mandatory recommendations, with private banks exceeding in compliance. However, there were no major differences found regarding transparency/disclosure practices and shareholders' rights. The study aims to compare governance quality between Indian public and private banks.
11.parameters of conventional and islamic bank抯 profitability in pakistanAlexander Decker
This document summarizes a research study that analyzed the key determinants of profitability for conventional and Islamic banks in Pakistan from 2006-2010. The study used regression analysis to evaluate the relationship between various internal bank characteristics and profitability, as measured by return on assets. The results found that total assets had a negative relationship with profitability, suggesting larger banks may have lower efficiency. Total equity and deposits both had a positive relationship with profitability. The study concluded that major internal factors like assets, capital, loans, and deposits influence bank profitability in Pakistan.
11.[11 18]parameters of conventional and islamic bank抯 profitability in pa...Alexander Decker
This document summarizes a research study that analyzed the key determinants of profitability for conventional and Islamic banks in Pakistan from 2006-2010. The study used regression analysis to evaluate the relationship between various internal bank characteristics and profitability, as measured by return on assets. The results found that total assets had a negative relationship with profitability, suggesting larger banks may have lower efficiency. Total equity and deposits both had a positive relationship with profitability. The study concluded that major internal factors like assets, capital, loans, and deposits influence bank profitability in Pakistan.
Liquidity, capital adequacy and operating efficiency of commercial banks in k...Alexander Decker
This document summarizes a research journal article that examines the effect of liquidity and capital adequacy on the operating efficiency of commercial banks in Kenya. Specifically, it analyzes how bank liquidity ratios and capital adequacy ratios impact operational efficiency. The study found that the previous year's operational efficiency, liquid assets to short-term liabilities ratio, and total capital ratio positively and significantly affect bank operating efficiency. Regression analysis showed that 41.08% of banks' operational efficiency is explained by the study variables. Therefore, banks should focus on improving liquidity ratios and capital ratios to enhance operating efficiency.
This document contains details of a student project analyzing the financial statements of the top 3 Indian banks - SBI, ICICI, and PNB. It includes the student's name, roll number, project title, subject area, and guide's name. The project involves calculating and comparing various ratios such as profitability, leverage, payout, and liquidity ratios across the three banks. The objectives are to assess the banks' profitability, do comparative analysis between banks, and evaluate operational efficiency. The introduction provides background on banks' role in the economy. The literature review discusses previous research on analyzing banks' financial performance.
A study on effect of liquidity management on profitability with select privat...Supriya Mondal
This document provides background information and a literature review for a study on the relationship between liquidity and profitability in select public and private sector banks in India. It begins with an introduction to the topic, outlining the trade-off between liquidity and profitability for banks. It then reviews 10 previous research papers on similar topics, analyzing factors like liquidity ratios, efficiency, and performance comparisons between public and private sector banks. The reviewed papers examine issues like the effect of liquidity on profitability, comparing liquidity positions between bank types, and evaluating banks' financial health using the CAMEL model.
Financial appraisal of commercial banks in india a post reforms asessmentAlexander Decker
This document summarizes a research study analyzing the financial performance of commercial banks in India following economic reforms. It begins by providing background on the importance of banks in India's financial system and the transformation of banking since nationalization. The study aims to evaluate operational performance, profitability, and factors influencing efficiency for different bank groups from 1990-2010. Methodology includes analyzing secondary data from central bank and industry sources using statistical tools like correlation, regression, and factor analysis. An extensive literature review covers prior research on Indian bank profitability, productivity, and efficiency.
This document summarizes research on bank profitability and efficiency in India and other countries. It discusses several studies that have analyzed the profitability and efficiency of Indian banks using different methods like DEA analysis and stochastic frontier analysis. The studies found that public sector banks were generally more efficient than foreign banks, which were slightly more efficient than private sector banks. Other key findings included declining efficiency of public sector banks over time, while foreign bank efficiency improved. The document also summarizes some international studies on the impact of deregulation on bank profitability efficiency in countries like Spain.
Analysis of Internal, Market & Economic Based Financial Performance Measureme...IOSRJBM
The aim of this study is to investigate the financial performance of 10 commercial banks listed on Dhaka Stock Exchange. In this paper, financial performance has been measured by using three indicators. Internal–based performance measured by Return on Assets, Market-based performance measured by Tobin’s Q model (Price / Book value of Equity) and Economic–based performance measured by Economic Value adds. The correlation and multiple regression of annual time series data is used to find the impact of bank size, credit risk, operational efficiency and asset management on financial performance measured by the three indicators, The study rejected the null hypothesis and it is found that there exist statistically significant impact of bank size, credit risk, operational efficiency and asset management with ROA and Economic Value Added. On the other hand Tobin’s Q has insignificant impact on financial performance of commercial banks
A study on effect of liquidity management on profitability with select privat...Supriya Mondal
This document provides a literature review on 9 previous research papers related to the relationship between liquidity management and profitability in banks. The papers examined liquidity ratios like CDR, CRDR and IDR and profitability ratios like ROA, ROE and ROI in various public sector, private sector and cooperative banks in India over different time periods. Most of the studies found an inverse or negative relationship between liquidity and profitability, indicating that increased liquidity leads to decreased profits and vice versa. The papers also compared performance between public and private sector banks, with most finding that private banks had better efficiency and profitability.
Financial Performance Analysis of Selected Private Sector Banks in IndiaDr. Amarjeet Singh
The performance of the banking system has been
widely recognized as an important element for economic
growth and for enhancing the economic and financial system
buoyancy in facing financial crisis. In fact, such a vital role in
the economy has made banks to be considered as one of the
most strained kinds of businesses in the globe as they are
subject to close scrutiny since banks will otherwise be
counterproductive and severely damage the economy of a
country. Efficient and profitable banks maximize
shareholders’ value and encourage the shareholders to make
additional investments. As a result of which, more
employment opportunities will be created and more goods
and service will be produced and ultimately bring about
economic growth in which private and public sector banking
institutions play equal role. The present study analyses the
financial performance of selected private banks in India with
the help of correlation analysis by considering return on total
assets as the independent variable.
DETERMINANTS OF BANK PROFITABILITY: EVIDENCE FROM COMMERCIAL BANKS OF BANGLADESHMd. Shohel Rana
This paper attempts to investigate the impact of different bank specific
and macroeconomic variables on bank profitability by considering 23
commercial banks of Bangladesh based on data availability during the
period 2013-17. These data are collected from the individual banks
annual reports, Bangladesh Bureau of Statistics (BBS) and a variety of
publications of the Bangladesh Bank. The fixed effect model for panel
data has been applied to operate the regression analysis among the
variables. In the study, three identical measures of profitability namely
Return on Asset (ROA), Return on Equity (ROE) and Net Interest
Margin (NIM) are used. In the model for ROA, the result indicated
that earning variable (TIN, NII), and asset structure (DPST) have a
significant positive relationship with ROA, and asset quality (NPL) has
significant negative impact on ROA. For ROE, earning (TIN and NII)
and capital strength (CAP) have a significant positive relationship of
the entire explanatory variable with ROE. Only asset quality (NPL)
has significant negative impact on ROE. For NIM, earning variables
(TIN), capital strength (CAP) and liquidity (LTA) have a significant
positive relationship with NIM. This study find no significant impact
of the macroeconomic factors namely growth rate of GDP and rate
inflation and rate of interest included in the models on profitability.
For decision making and developing the performance of financial
organization in the future the findings of this study can assist the
investors, policymakers, management body and other stakeholders
Evaluation of some private commercial banks in bangladesh from performance pe...ijmvsc
Banks operate on a huge scale at the heart of the modern economy and the banking system has become an
integral part in the progress of economic development in Bangladesh. Besides, the banking sector has
made their innovation and efficiency crucial to the economy as it competes in an e-commerce world. The
role of banking system in this situation cannot be denied at all. This report intends to evaluate the
performance of selected private commercial banks in Bangladesh. In the study, best efforts have been put
on evaluating the performance. The growing pattern of branches, employees, deposits, loans and
advances, classified loan, net income and earnings per share of selected private commercial banks has
been considered to make an analysis on the performance evaluation of the selected private commercial
banks. To evaluate the performance, data have been collected from the secondary sources. Then the
collected data have been analyzed. From the analysis, it has been found that all of the selected banks are
in a position to make a sustainable growth in respect of branches, employees, deposits, loans and
advances, classified loan, net income and earnings per share during the period of 2007-2011 with some
fluctuation. Besides the growth pattern, other forms of calculations have been used for every selected
variable and they are trend equation and square of correlation coefficient. Under trend equation analysis,
the variables named branches, employees, deposits and net incomes hold more positive value than the
other variables considered. As the value of the slope always shows the positive number, it is a clear
indication that Bangladesh has a very good prospect in case of private commercial banks
Interfirm comparison on select private banking companies in indiaIAEME Publication
This document provides an analysis of the financial performance of 10 private banking companies in India from 2007-2008 to 2011-2012 using 7 key financial ratios. The ratios analyzed include net profit ratio, return on total assets, return on shareholders' funds, return on capital employed, asset turnover ratio, current ratio, and operating expenses ratio. The companies' performance on these ratios was evaluated using quartile deviation technique to classify them as having low, average, or high performance. The analysis found that Karur Vysya Bank Ltd and City Union Bank Ltd consistently demonstrated higher performance ratios compared to the other banks.
Determinants of commercial banks profitability panel data evidence from pakistanAlexander Decker
This document summarizes a research study that investigated the determinants of commercial bank profitability in Pakistan from 2004-2010. The researchers used multiple regression analysis on a sample of 5 major commercial banks to determine the relationship between return on assets (the dependent variable) and various internal and external independent variables. The results indicated that internal factors like liquidity, efficiency, asset composition, deposit composition, and external factors like firm size had a significant impact on bank profitability. The study adds to the limited literature on factors influencing bank performance in Pakistan.
This document summarizes a study on the financial performance evaluation of Punjab National Bank from 2014-2018. It provides background on the bank, including its history dating back to 1894. The study aims to examine the business performance of PNB through analyzing financial ratios and conducting regression analysis to determine the impact of deposits and advances on net profit. The methodology section outlines the secondary data sources used and tools for statistical analysis. Preliminary results are presented on key financial indicators for PNB over the period studied.
Financial Performance Analysis of Bank of Bhutan Limited using Regression Ana...ijtsrd
This study analyses the financial performance of the Bank of Bhutan Limited BOBL . To measure the performance of BOBL, the factors affecting the profitability of the bank have been analysed. The data for the study are collected from the published annual reports of BOBL for the period of 2009 2020. Regression analysis is used to evaluate the financial performance of the bank. Return on Investment ROI is used as a dependent variable, and Return on Assets ROA , Total Expense Ratio TER , Loans and Advances to Total Assets Ratio LTAR and Spread to Total Deposit Ratio STDR are used as independent variables. The findings of the study indicate that TER has a positive relationship with the profitability of BOBL whereas LTAR has a negative relation with BOBL’s profitability. Hence, it is concluded that among four independent variables, ROA and TER had significant impact on the profitability of BOBL. Dr. Aaditya Pradhan | Mr. Ugyen Thinlay "Financial Performance Analysis of Bank of Bhutan Limited using Regression Analysis" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-7 | Issue-3 , June 2023, URL: https://www.ijtsrd.com.com/papers/ijtsrd58589.pdf Paper URL: https://www.ijtsrd.com.com/management/accounting-and-finance/58589/financial-performance-analysis-of-bank-of-bhutan-limited-using-regression-analysis/dr-aaditya-pradhan
The purpose of this study is to determine the factors that influence risk management, capital, GCG,
and efficiency on the financial performance of Islamic commercial banks in Indonesia. The population in this
study were Islamic commercial banks in Indonesia and selected by purposive sampling and selected 10 Islamic
commercial banks.
A study on financial performance of vijaya bankDattu MudhiRaj
This document discusses analyzing the financial performance of Vijaya Bank through ratio analysis. It begins by defining financial analysis and its objectives. Ratio analysis is identified as a useful technique for evaluating various financial aspects of a company. The study focuses on analyzing Vijaya Bank's profitability, asset utilization, liquidity, and financial capabilities over three financial years using data collected from annual reports and the bank's website. The objectives are to evaluate Vijaya Bank's financial performance using ratio analysis and suggest improvements. Secondary research on previous bank performance studies is also reviewed.
This document is the index page of a seminar report on analyzing the performance of public sector banks in India using the CAMEL framework. The index lists the following chapter titles: introduction, literature review, history of the CAMEL framework, industry profile of the banking sector in India, description of the CAMEL model, and conclusions. It provides a brief overview of the topics to be discussed in each chapter, including definitions of key terms like scheduled commercial banks. The industry profile section gives a high-level history of banking in India from 1786 to present day and describes the three phases of development and nationalization of banks.
Liquidity Management and Its Impact on Banks Profitability: A Perspective 0f ...inventionjournals
Purpose:-The basic aim of this research is to examine liquidity management impact on profitability in banking sector of Pakistan. Methodology: - The secondary data used for this study and taking from publish annual report of ten banks (2006-2015). The data was analyzed by using correlation, descriptive statistics and regression techniques run on E-views. The quick, current, cash, interest coverage and capital adequacy ratios are taken as dimension of liquidity and return on asset, return on equity, and earning per share as dimension of profitability. Findings: - The research finding shows that quick and capital adequacy ratio has positive impact on banks profitability determinants earnings per share and return on assets. The cash and current ratio has a negative relationship with return on assets. While interest coverage ratio is positively associated with return equity and earnings per share and is negatively associated with return on equity. Therefore overall empirical results show that liquidity management has positive impact on banks profitability. Research Limitation: - This paper examines banks liquidity management and their impact on banks profitability in Pakistan by taking only ten conventional banks data for ten year. The further research can be conducted by adding different segment, banks and countries.
Similar to 052 om c-dhanapal&gganesan-measuring_operational_efficiency_of (1) (1) (20)
Liquidity Management and Its Impact on Banks Profitability: A Perspective 0f ...
052 om c-dhanapal&gganesan-measuring_operational_efficiency_of (1) (1)
1. The 2012 International Conference on Business and Management
6 – 7 September 2012, Phuket - Thailand
~ 700 ~
Measuring Operational Efficiency of Public Sector
Banks in India
C.Dhanapal
Salem Sowdeswari College, Salem, Tamil Nadu.
E-mail:dhanapal.c@gmail.com
G.Ganesan
Bharathiyar University, Coimbatore Tamil Nadu
E-mail:drganesanbu@rediffmail.com
Abstract
In recent days, the growing Universalisation and internationalization of banking
operations, driven by a combination of factors, such as the continuing
deregulation, heightened competition and technological advancements have
altered the face of the banks from mere intermediator to provider of quick,
efficient and consumer friendly services. The use of mass customization in banks
and other service companies can meet the market demand and enhance the
competitiveness by customized products that are designed and provided for
individual customers to meet their individual needs. Moreover, banks today have
to adopt strategies that embrace both a closer reaction to the customers’ needs
and efficiency by custom-tailored services to meet customers’ diversified and
changing needs at near mass production price. Therefore, this research paper is
to explore the possibility of getting more deposits by an efficient and timely
services and measure the impact of variables of E-banking products on customer
satisfaction and five service quality dimensions namely reliability,
responsiveness, assurance, empathy and tangibles have been established based
on the need and requirement of the customers.
The study is based on the sound methodology which covering both primary and
secondary data. Extensive reviews have been made on the available banking
products introduced by banks globally and the growth of deposits of sample
banks has been analyzed with ten years data of the sample banks of three
categories namely, private sector, public sector and foreign banks performed in
India. Primary data has been collected by well framed comprehensive
questionnaire and monitored on selected sample respondents who are really
representatives of the universe.
Keyword: Customization, E- banking products, Consumer satisfaction, Service
Quality.
INTRODUCTION
The shape of the Indian Banking Industry has changed due to the World Trade
Organization, increasing international risk triggered by Basel III norms (laid down by
Basel committee under the supervision of Bank for International Settlements (BIS))
,Free Trade Agreements (FTAs) and the Reserve bank of India guidelines. It needs
every banker to design innovative banking products and uses information technology
2. The 2012 International Conference on Business and Management
6 – 7 September 2012, Phuket - Thailand
~ 701 ~
to reduce their cost of operation. New concepts like personal banking, retail banking,
bankassurance, internet banking, phone banking, mobile banking, and rural banking
have emerged. In this situation, the banks have to track their performance to improve
their profitability by paying attention to the key influencing factors for its timely
correction and for future growth.
Statement of the problem
With increased competition in the banking Industry, the Net Interest Margin (NIM) of banks
have come down over the last one decade. Hence, it is necessary to improve their operational
efficiency while meeting the customer requirements. Product innovations and process re-
engineering will be the order of the day. All banks therefore to go for rejuvenating their
costing and pricing to segregate profitable and non-profitable business. Banking industry is
fragmented in its structure and has restrictions on capital availability and deployment, lack of
institutional support infrastructure, restrictive labor laws, weak corporate governance and
ineffective regulations. Besides this, increase in the number of foreign players’ poses threat to
both public and private sector Banks. Therefore, it is appropriate to know the answer for the
following research questions:
1. Is there any possibility of finding the factor influencing the profitability?
2. Is there any possibility of improving the profitability?
3. Is there any avenue to identify the efficient bankers?
OBJECTIVES
The study has been carried out with the following objectives:
1. To examine the input and out variables of the banking companies.
2. To identify the significant factors influencing the profitability and efficiency.
3. To measure the operational efficiency of the banks.
REVIEW OF LITERATURE
There are numerous empirical studies conducted on the issue of measuring the
efficiency of the banks both in India and abroad. Some of them are given below:
Swamy (2001) studied the comparative performance of different bank groups
since 1995-96 to 1999-2000. An attempt was made by researcher to identify factors
which could have led to changes in the position of individual banks in terms of their
share in the overall banking industry. He concluded that in many respects nationalized
public sectors banks are much better than private banks, even they are better than
foreign banks.
3. The 2012 International Conference on Business and Management
6 – 7 September 2012, Phuket - Thailand
~ 702 ~
Samwel Kakuku Lopoyetum (2005) in his article elaborated that the
profitability performance of the UCBs can be improved by strengthening the
magnitude of burden ratio. The spread ratio can be increased by increasing the
interest receipts faster than the interest payments. The burden ratio can be lowered
by decreasing the manpower expenses, other expenses and increasing other incomes.
The Indian viewpoint alluding to the concepts of ‘credit culture’ owing to
Reddy (2004) and ‘lazy banking’ owing to Mohan (2003a) has an international
perspective since several studies in the banking literature agree that banks’ lending
policy is a major driver of non-performing loans (McGoven, 1993, Christine 1995,
Sergio, 1996, Bloem and Gorters, 2001).
Namita Rajput and Harish Handa (2011) in their article “Banking effiency :An
application of DEA” have examined the efficiency of the banking sector in India
and concluded that, as the economy grows and more and more opportunities
come into the system, banks must focus on increasing their efficiency so that
they can provide a firm support in the financial market for the industries to
develop.
IMPORTANCE OF THE STUDY
An efficient banker can leverage the opportunities to meet the challenges to
the best of their abilities. Hence, it is necessary to study the operational efficiency of
the banks to frame strategies for their survival. The study compares the efficiency of
21 public sector banks. It first finds relationship between the profitability and factors
affecting profitability and also identifies significant factors influencing the profitability.
The performance of the banking sector has to be compared with the Benchmarking of
the bankers to find the gap for taking steps to improve their efficiency.
RESEARCH DESIGN
The study covers a period of 5 years from 2006-07 to 2010-11 of 21 public
sector banks in India. The data required for the study has been collected from the IBA
bulletin and statistics published by Reserve bank of India.
The variables like total deposits, total advances, total assets, NPA’s, total
incomes and operating profit and various ratios such as Return on Assets, Spread to
Total Assets NPA to Net Advances, PA to Total Assets, Capital Adequacy ratio, are
taken for the analysis.
TOOLS USED
Multiple Regression Analysis is used to find the relationship between operating
profit and other variables. Similarly profitability ratio and other variables. DEA-Data
4. The 2012 International Conference on Business and Management
6 – 7 September 2012, Phuket - Thailand
~ 703 ~
Envelopment Analysis is used to measure the relative efficiency of banks having same
multiple input and multiple output units.
FACTORS INFLUENCING THE OPERATING PROFIT
Multiple Regression Analysis has been used to build the model to establish the
relationship between operating profit and the influencing factors of banks.
The functional form of regression model is:
Y = b0+b1+ b2x2+ b3x3+ b4x4+ b5x5+ b6x6 + b7x7+ b8x8.
Here the dependent variable is operating profit (Y) and independent variables
are x1=.Deposit, x2=. Advances,. x3= Total assets, x4= Total expenses, x5=.Net NPA, x6=
Total income, x7=.business and x8.=.spread.
The results of the regression and the influence of co-efficient on operational profit of the 21
banks are given in the table1.
The study shows that NPA, Total Income, Total Expenses and Spread are the
most significant factors influencing the operational profit. The result shows the
variable wise number of banks showing the influence on operating profit as:
Deposits Advances Total Assets Total expenses NPA Total Incomes Spread
9 Banks 7 Banks 6 Banks 16 Banks 9 Banks 5 Banks 18 Banks
To test the validity of the model, the following hypothesis has been framed.
5. The 2012 International Conference on Business and Management
6 – 7 September 2012, Phuket - Thailand
~ 704 ~
Table-1
Regression Co-efficient, t value and level of influence
*=Significant;**=Not Significant; Co-efficient and t values.
Hypothesis.1 :
There is no significant relationship between operating profit and eight
independent variables.
ANOVA tests the validity of the regression model fit and the output is given in
the following table.
N
o.
Bank Constant Deposit Advances Total
Assets
Total
Expenses
Net NPA Total
Income
Spread
1. Allahabad bank -470.224 0.024
(t=17.251)*
2. Andhra Bank -215.828 0.014
(t=-
12.166),*
0.328
(t=-8.599),*,
3. Bank of Baroda -321.83 0.0131
(t=19.143),
*
4. Bank of India -0.001 -1.000
(t=-
163083.57),*
1.000
(t=207967.397
),*
5. Bank of
Maharashtra
0.005 1.016E-7
(t=--,)*.,
-1.000
(t=--),*
1.000
(t=--),*
-1.457E-5
(t=--),*,
6. Canara Bank 749.901 0.025
. (t=--)*
-0.113
(t=--),*
-1.495
(t=--),*
1.000
(t=--),*
-1.143
(t=--),*
7. Central Bank of
India
857.03 0.010
(t=--)*
-0.024
(t=--)*
-0.869
(t=--)*
0.185
(t=--)*
8. Corporation Bank 859.592 -0.070
(t=--)*
1.078
(t=--)*
12.333
(t=--)*
-1.875
(t=--)*
9. Dena Bank 360.739 0.072
(t=--)*
-0.548
(t=--)*
-0.249
(t=--)*
0.095
(t=--)*
10. Indian Bank -333.697 0.004
(t=--)*
-0.039
(t=--)*
-1.465
(t=--)*
1.011
(t=--)*
11. Indian Overseas
Bank
-940.715 -0.035
(t=--)*
-0.640
(t=--)*
0.451
(t=--)*
0.885
(t=--)*
12. Oriental Bank of
Commerce
-463.174 0.045
(t=--)*
-0.185
(t=--)*
-0.671
(t=--)*
0.429
(t=--)*
13. Punjab & Sind
Bank
-72.295 0.007
(t=--)*
-0.042
(t=--)*
-1.587
(t=--)*
0.755
(t=--)*
14. Punjab National
Bank
-
1486.82
9
0.076
(t=--)*
-0.563
(t=--)*
-1.307
(t=--)*
0.133
(t=--)*
15. Syndicate Bank -21.217 -0.012
(t=--)*
0.110
(t=--)*
-0.221
(t=--)*
0.321
(t=--)*
16. UCO Bank -310.361 -1.0119E-5
(t=--)*
0.060
(t=--)*
-0.145
(t=--)*
0.700
(t=--)*
17. Union Bank of
India
352.593 -0.016
(t=--)*
0.527
(t=--)*
0.469
(t=--)*
-0.384
(t=--)*
18. United Bank of
India
-194.441 0.004
(t=--)*
-0.089
(t=--)*
0.103
(t=--)*
0.810
(t=--)*
19. Vijaya Bank 1254.41
5
-0.028
(t=--)*
0.207
(t=--)*
1.545
(t=--)*
-0.073
(t=--)*
20. IDBI Bank Ltd. 1393.99
1
0.031
(t=--)*
-0.456
(t=--)*
0.864
(t=--)*
0.758
(t=--)*
21. TOT.SBI Groups -
7080.62
5
0.010
(t=--)*
-0.127
(t=--)*
0.780
(t=--)*
1.833
(t=--)*
9 banks 7 banks 6 banks 16 banks 9 banks 5 banks 18banks
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Table 2
ANOVA
From the table it is observed that the co-efficient of Multiple determination- R2
explains 98% of the variation in the dependent variable. The F and P value shows the
model adequately fits the data at 1% level of significance.
Hence, the hypothesis is rejected. That is, there is significant relationship
between the dependent variable-operational profit and other independent variables.
Measuring the Performance of the Public Sector Banks:
To measure the performance of the banks, five years average ratios of the
variables have been considered. It is shown in the table. Based on this data, the
relationship between dependent variable-Profitability and independent variables –
Return on Assets, Spread to Total Assets, NPA to Net Advances, Cost to Income,
Advances to Deposits and Capital Adequacy ratios are found out by using Multiple
Regression Analysis.
Name of the Bank R2
F Anova.
Fit.Sig
Remarks
1. Allahabad bank 0.990 297.586 0.000 Adequate fit
2. Andhra Bank 1.000 2433.59 0.000 Adequate fit
3. Bank of Baroda 0.992 366.446 0.000 Adequate fit
4. Bank of Maharashtra 1.000 9.596E10 0.000 Adequate fit
5. Bank of India 1.000 - 0.000 Adequate fit
6. Canara Bank 1.00 - 0.000 Adequate fit
7. Central Bank of India 1.00 - 0.000 Adequate fit
8. Corporation Bank 1.00 - 0.000 Adequate fit
9. Dena Bank 1.00 - 0.000 Adequate fit
10. Indian Bank 1.00 - 0.000 Adequate fit
11. Indian Overseas Bank 1.00 - 0.000 Adequate fit
12. Oriental Bank of
Commerce
1.00 - 0.000 Adequate fit
13. Punjab & Sind Bank 1.00 - 0.000 Adequate fit
14. Punjab National Bank 1.00 - 0.000 Adequate fit
15. Syndicate Bank 1.00 - 0.000 Adequate fit
16. UCO Bank 1.00 - 0.000 Adequate fit
17. Union Bank of India 1.00 - 0.000 Adequate fit
18. United Bank of India 1.00 - 0.000 Adequate fit
19. Vijaya Bank 1.00 - 0.000 Adequate fit
20. IDBI Bank Ltd. 1.00 - 0.000 Adequate fit
21. TOT.SBI Groups 1.00 - 0.000 Adequate fit
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Table-3
Five years Average Ratio of Public Sector Banks
Source: IBA bulletin
The initial results of the regression and the influence of co-efficient on
Profitability of the 21 banks are given in the table.
Table.4.
Initial Regression Co efficient
The study shows that Capital Adequacy ratio is not significant, whereas all
others are Significant at 1 percent level of significance. It shows that Return on Assets
Banks ROA SP/TA
NPA/
NetAdv.
Profitability
(S-B)/
Business Cost-Income Advance-Assets
Advance-
Deposits CPL-ADQ
Allahabad Bank 1.15 2.33 0.81 1.28 77.11 60.38 69.30 10.86
Andhra Bank 1.26 2.62 0.21 1.34 76.30 62.27 72.12 12.42
Bank of Baroda 1.06 2.31 0.41 1.21 75.59 61.57 71.88 12.69
Bank of India 1.02 2.31 0.83 1.29 75.69 61.76 73.32 12.39
Bank of Maharashtra 0.68 2.34 1.17 0.90 83.20 59.15 67.43 11.35
Canara Bank 1.14 2.20 1.01 1.20 78.34 61.77 71.44 13.97
Central Bank of India 0.59 1.96 1.15 0.78 84.72 58.40 66.24 10.83
Corporation Bank 1.26 2.12 0.37 1.40 74.44 57.72 69.91 13.28
Dena Bank 0.96 2.31 1.29 1.14 78.79 60.45 67.98 11.90
Indian Bank 1.58 3.15 0.31 1.75 71.25 58.51 67.89 13.12
Indian Overseas Bank 1.01 2.53 1.24 1.25 78.40 60.24 72.64 13.09
Oriental Bank of
Commerce 1.01 2.12 0.80 1.14 79.64 60.18 69.42 11.96
Punjab & Sind Bank 1.14 2.57 0.45 1.21 79.09 58.40 68.68 12.00
Punjab National Bank 1.27 2.95 0.59 1.57 72.56 61.81 73.37 12.51
Syndicate Bank 0.80 2.21 0.91 0.98 81.37 62.70 71.87 12.01
UCO Bank 0.62 1.86 1.66 0.84 83.84 61.29 69.12 10.92
Union Bank of India 1.15 2.43 0.69 1.32 76.09 61.15 71.82 12.56
United Bank of India 0.57 2.09 1.47 0.91 82.99 55.02 62.93 12.07
Vijaya Bank 0.75 2.05 0.98 0.97 82.61 57.84 65.81 11.98
IDBI Bank Ltd. 0.69 0.91 1.08 0.90 85.60 60.85 103.64 12.05
TOT.SBI Groups 3.88 2.38 4.17 1.33 77.40 59.86 76.70 12.21
Model
Unstandardized Coefficients
Standardized
Coefficients
t Sig.B Std. Error Beta
1
(Constant) 4.257 .535 7.956 .000
Return on Assets .355 .069 .989 5.138 .000
spread to Total Assets .135 .032 .239 4.176 .001
NPA to Net Advances -.372 .073 -1.235 -5.072 .000
Cost to Income ratio -.036 .005 -.576 -7.396 .000
Advances to Total Assets -.025 .004 -.188 -5.991 .000
Advances to Deposit Ratio .008 .001 .246 5.611 .000
NPA to Total Assets .725 .146 .718 4.973 .000
Capital Adequacy Ratio -.005 .010 -.016 -.497 .628
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ratio and NPA to Total Assets ratio are showing most significant positive influence on
profitability whereas the NPA to Net Advances is showing the most negative influence.
The final results obtained from the stepwise regression and the influence of co-
efficient on profitability is given in the following table::
Table 5
Stepwise Regression Co-efficient
To test the validity of the model, the following hypothesis has been framed.
Hypothesis.2:
There is no significant relationship between-Profitability and Return on Assets,
Spread to Total Assets, NPA to Net Advances, Cost to Income, Advances to Deposits
and Capital Adequacy.
ANOVA tests the validity of the regression model fit and the output is given in the following
table:
Table-6
ANOVA
It is observed that the co-efficient of multiple determination- R2
explains 99.3
percent of the variation in the dependent variable at the initial stage whereas at the
stepwise regression final stage R2
is 93.3 percent.The F and P value shows the model
adequately fits the data at 1% level of significance.
Hence, the hypothesis is rejected. That is, there is significant relationship
between the dependent variable-Profitability and other independent variables.
The final result from the stepwise regression shows that cost to income is the
only one dominant factor contributing to its profitability. It shows that for one unit
Model
Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
95.0% Confidence
Interval for B
Collinearity
Statistics
B Std. Error Beta
Lower
Bound
Upper
Bound Tolerance VIF
(Constant) 5.872 .290 20.268 .000 5.265 6.478
Cost to Income
ratio
-.060 .004 -.966 -16.226 .000 -.067 -.052 1.000 1.000
Dependent Variable: Profitability ratio
Model Sum of Squares df Mean Square F Sig.
1 Regression 1.206 8 .151 200.985 .000
a
Residual .009 12 .001
Total 1.215 20
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increase in cost to income, the profitability gets deceased by 0.06 units and vise versa.
Based on the cost to income the top and bottom three banks are identified as :
Table -7
Top and Bottom banks
Measuring the relative efficiency using DEA
DEA has been used as a measurement tool for measuring the relative
efficiency. It is also called as the CCR model after the researchers Charnes, Cooper and
Rhodes. The present study suggests that banks produce certain inputs to produce
certain outputs. The efficiency of bank is measured in terms of how efficiently they are
able to utilize their inputs given their outputs.
Data Envelopment Analysis (DEA) is a powerful method widely used in the
evaluation of performance of Decision Making Units (DMUs). The efficiency of each
DMU is the ratio (sum of weighted outputs)/(sum of weighted inputs), adjusted to be
a number between 0 and 1. This is a very common definition of productivity. Those
DMUs which do attain an efficiency of 1 form a mathematical space (the "efficient
frontier") which "envelops" all the other DMU points, hence the name Data
Envelopment Analysis. This frontier is very precisely defined and allows the calculation
of potential improvements for the inefficient DMUs. Apart from the efficiency scores,
it also provides guidelines for improvement and specific targets for the inefficient
DMUs.
To find out the efficient and inefficient scores of the public sector banks, they
are grouped into small size banks and large banks based on the average deposits of all
the 21 banks of the year 2006-07. On this basis, we have 12 small banks and 9 large
banks. The average of five years data have been taken as input and output variables
and presented under the small and large size banks.
No. Top Three Bank Profitability Cost-to Income
1. Indian Bank 1.75 71.25
2. Punjab national Bank 1.57 72.56
3. Corporation Bank 1.40 74.44
No. Bottom Three Bank Profitability Cost-to Income
1. IDBI Bank Ltd 0.90 85.60
2. Central Bank of India 0.78 84.72
3. UCO bank 0.84 83.84
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Table-6
Public sector Banks—Small size Banks
xl DEA version 2.0 software is used to process the data. The following are the
contents of the Scores sheet of the banks based on the output-oriented, variable
returns-to-scale model:
Table-7
Scale Efficiencies-Small Size Banks
Banks INPUTS -Indian Rs. In Cr. OUTPUTS. - Indian
Rs.in Crs.
Deposits Advances Total
Assets
Total
Exp.
Net
NPA
Total
income
Operating
Profit
Allahabad Bank 97069.21 68438.00 104247.33 6617.88 493.73 8634.62 2016.74
Andhra Bank 68539.22 51481.63 74369.14 4752.97 109.91 6252.79 1499.82
Bank of Maharashtra 51616.28 37693.01 58737.75 3854.21 416.86 4604.05 749.83
Corporation Bank 76249.28 59437.67 92280.01 5276.13 200.38 7065.51 1789.38
Dena Bank 44047.52 33048.11 49395.58 3119.10 374.02 3941.61 822.51
Indian Bank 74950.11 57175.01 86777.14 5478.05 167.28 7735.20 2257.15
Oriental Bank of
Commerce
99906.67 75615.93 115199.71 7557.70 571.86 9531.17 1973.47
Punjab & Sind Bank 37540.82 29558.90 43898.21 2845.77 115.40 3572.55 726.78
UCO Bank 102536.63 76365.27 115408.19 7494.00 1140.37 8994.18 1500.18
United Bank of India 56939.68 39771.03 65141.38 4107.68 540.08 4956.90 849.22
Vijaya Bank 55054.21 39345.63 62564.49 4270.60 388.17 5142.49 871.89
IDBI Bank Ltd. 115381.18 120235.23 178776.97 11559.21 1167.61 13652.86 2093.65
Efficiency scores Scale efficiencies Returns-to-scale CCR score NIRS score
Allahabad Bank 0.9808 0.9508 decreasing 0.9326 0.9808
Andhra Bank 1.0000 1.0000 constant 1.0000 1.0000
Bank of Maharashtra 0.9506 0.9498 increasing 0.9028 0.9028
Corporation Bank 0.9528 0.9954 increasing 0.9484 0.9484
Dena Bank 0.9842 0.9095 increasing 0.8952 0.8952
Indian Bank 1.0000 1.0000 constant 1.0000 1.0000
Oriental Bank of Commerce 1.0000 0.9317 decreasing 0.9317 1.0000
Punjab & Sind Bank 1.0000 0.9181 increasing 0.9181 0.9181
UCO Bank 0.9405 0.9296 decreasing 0.8743 0.9405
United Bank of India 0.9593 0.9604 increasing 0.9213 0.9213
Vijaya Bank 1.0000 0.9661 increasing 0.9661 0.9661
IDBI Bank Ltd. 1.0000 1.0000 constant 1.0000 1.0000
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The efficient units are :Andhra Bank,Indian Bank,oriental Bank of Commerce,
Punjab& Sind Bank,Vijaya Bank and IDBI Bank have scores 1 and are shown in cells
with a blue background.
The CCR score is a kind of "global" efficiency measurement in which
inefficiencies due to pure technical reasons are confounded by inefficiencies due to
the scale of operations. Variable Returns-to-Scale (VRS) score represents a more strict
"local" definition of efficiency, devoid of the scale effect, and so it is always larger. The
last column, “NIRS score” (from Non-Increasing Returns-to-Scale) contains the score
obtained by an auxiliary model which is required to obtain this characterization.
Table-8
Public Sector Banks-Large Size
The following are the contents of the Scores sheet with the banks based on the output-
oriented, Variable Returns-to-Scale model.
Table-9
Scale Efficiencies- Size Banks
INPUTS- Indian Rs. In Crs. Outputs- Indian Rs.in Crs.
Banks Deposits Advances Total Assets Total Exp. Net NPA Total income Operating Profit
Bank of Baroda 203209.69 147603.95 237373.26 12946.80 567.49 17259.89 4313.09
Bank of India 197649.99 144617.70 234457.55 13523.35 1236.93 17851.75 4328.40
Canara Bank 202394.11 145152.90 233391.18 15006.57 1496.12 19207.26 4200.68
Central Bank of India 133166.26 89077.00 151409.61 9737.22 915.00 11461.36 1724.14
Indian Overseas Bank 101841.07 74635.90 123008.77 8031.40 988.72 10189.56 2158.16
Punjab National Bank 215661.18 159901.79 256663.90 15471.26 952.71 21421.25 5949.99
Syndicate Bank 108462.26 78888.40 124451.01 8050.96 727.91 9895.11 1844.15
Union Bank of India 140048.54 100697.79 163758.31 10023.26 764.70 13148.75 3125.49
TOT.SBI Groups 953668.12 733537.76 1221389.83 76585.61 10649.33 99162.89 22577.27
Efficiency scores Scale efficiencies Returns-to-scale CCR score NIRS score
Bank of Baroda 1.0000 1.0000 constant 1.0000 1.0000
Bank of India 0.9660 0.9870 increasing 0.9534 0.9534
Canara Bank 0.9867 0.9998 increasing 0.9865 0.9865
Central Bank of India 0.9598 0.9895 increasing 0.9497 0.9497
Indian Overseas Bank 1.0000 1.0000 constant 1.0000 1.0000
Punjab National Bank 1.0000 1.0000 constant 1.0000 1.0000
Syndicate Bank 1.0000 0.9527 increasing 0.9527 0.9527
Union Bank of India 1.0000 0.9705 increasing 0.9705 0.9705
TOT.SBI Groups 1.0000 1.0000 constant 1.0000 1.0000
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The efficient units-Bank of Baroda, Indian Overseas Bank , Punjab National
Bank, Syndicate Bank, Union Bank of India and Total of State Bank of India Groups
have scores 1 and are shown in cells with a blue background.
RESULTS OF THE STUDY:
The researcher has found the following results from the study:
1. The Hypothesis.1 shows that there is a significant relationship between
operating profit and eight independent variables. The most significant
factors influencing the operating profit have been identified as NPA,
Total Income, Total Expenses and Spread. Out of 21 banks, 18 banks
were influenced by spread and 16 banks by total expenses.
2. The Hypothesis.2 shows that there is a significant relationship between
profitability and six independent variables. Except Capital Adequacy
ratio all others are significantly influencing the profitability. NPA to
Total Assets and ROA are key factors as they highest positive co-
efficient. Similarly, NPA to Net Advances are key factors as it has
highest negative co-efficient. The stepwise regression reveals that cost-
to income is the dominant factor for tuning the profitability.
3. DEA has identified 6 banks out of the 12 small size banks and 6 banks
out of the 9 large size banks as efficient banks.
SUGGESTIONS:
The following suggestions may be considered for improving productivity,
profitability and operational efficiency of the banks:
1. Innovative product designing: It is needed to suit the needs of the
customers and to have sustainable growth. Examples are: Loans to
Small and Medium Enterprises (SME’s) to build more entrepreneurs’ for
booting the economy, Super Savings accounts, Zero base accounts,ATM
cards tie up with other banks, Mobile banking etc. RTGS and NEFT
system of fund transfers etc.
2. Development of new technology: Banks have to interact constantly
with the industry bodies, trade associations, farming community,
academic / research institutions and initiate studies, pilot projects, etc.
for evolving better financial models. Solar powered ATM technology
save costs.
3. Consolidation of players through mergers and acquisitions: To achieve
the optimal cost in operation and to get the economies of scale, every
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bank has to make changes in its structure by mergers/acquisitions and
other measures in the best interests of the business. This strategy
increases the healthiness of the banks and can reduce the operating
cost with the increased volume of business.
4. Rural and Social Banking: The banking system is expected to reorient
its approach to rural lending. “Going Rural” could be the new market
mantra. Rural market comprises 74% of the population, 41% of Middle
class and 58% of disposable incomes. Bankers have to concentrate on
rural banking as consumer growth is taking place at a fast pace in
17,113 villages in India with a population of more than 5000.
5. Banc assurance is catching up. Banks/ Financial Institutions have
started entering insurance business. From mere offering of insurance
products through network of bank branches, the business is likely to
expand through self-designed insurance products after necessary
legislative changes.
6. Reducing overstaffing and strategic tie with banks and financial
institutions would bring more possibility of revenue generation. This
strategy would increase the productivity of the banks.
7. Corporate Governance: Good corporate governance would bring
financial stability and reduces high profile breakdowns. The
transparency of the operations of the banks is emphasized by the
corporate governance. Following the Good Governance Practices is
essential for the building public confidence and faithful reporting.
CONCLUSION:
The study has clearly identified the most influencing factors affecting the
operating profit and profitability and also the efficient bankers. Besides
this,Enhancement of customer service and corporate governance ; application of
technology; implementation of Basel III; improvement of risk management systems;
implementation of new accounting standards; enhancement of transparency &
disclosures; and compliance with KYC(Know Your Customers) aspects would help the
bankers to improve their operational efficiency. The changes in interest rates
announced by Reserve Bank of India makes the NIM(Net Interest Margin) under
pressure and deteriorates the Quality of Assets.Hence,the bankers always have to
concentrate on Cost to Income-the interplay of Interest Income and operating
expenses and bring efficiency. Department of Post has identified providing banking
services through the proposed “Post Bank of India”(PBI) as a sort of financial inclusion.
It has the network of 1.55 lakh post offices of which 1.39 lakh are in rural areas. The
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present all India average population served by commercial banks per branch is 13,053(
as on 31march 2011).Whereas each post office on an average covers 5,992
people.Bringing “Rural Thrust “ by postal department is another threat to the bankers.
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Meenasharma(2011):, Measuring the efficiency of selected state Industrial Development
Corporations through the application of DEA,International Journal of Research in
Commerce and management ,Vol.2(2011),Issue2(Feb).
Manish Mittal and Aruna Dhade (2007), Profitability and Productivity in Indian Banks:
A Comparative Study,AIMS international Vol.1 No.2,may-2007,pp.132-157.
Mohan, R (2003): ‘Transforming Indian Banking – In search of a better tomorrow’,
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Ram Kumar.k :“Post Bank of India “ The Post man will bring loans besides money
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The Business Line, May 19,2012.
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