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Profitability drivers for Indian banks: a dynamic panel data analysis

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Abstract

The study aims to find the factors such as bank specific factors, banking industry factors and macroeconomic factors that affect bank profitability in India. The paper employs the data from Indian Public sector and Indian private sector banks for the period from 2006–2007 to 2012–2013. Both these banks contribute to more than 90% of total business of scheduled commercial banks in India. The study applies the dynamic panel data analysis. The dependent variables include return on average assets and return on equity, and independent variables include bank specific factors, banking industry factors, and economic factors. Among the bank specific factors, non performing loans and cost to income ratio negatively affects the bank profitability, and diversification measures do not affect the bank profitability.

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Acknowledgements

The author wish to thank the Editors and anonymous reviewers for providing notes that significantly improved the manuscript in all stages of the peer review process.

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  1. Indian Institute of Management, Sejbahar, Raipur, India

    Dhananjay Bapat

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Bapat, D. Profitability drivers for Indian banks: a dynamic panel data analysis. Eurasian Bus Rev 8, 437–451 (2018). https://doi.org/10.1007/s40821-017-0096-2

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