Key Factors in Determining the Financial Performance of the Indian Banking Sector

78 Pages Posted: 2 Aug 2012

Date Written: August 1, 2012


This research report which looks into several key factors which affect the financial performance with reference to profitability of Indian banking sector considering econometric approach using regression model to identify which of the financial indicators will have implications and which do not have implications on the financial performance of bank, more specifically related to profitability.

To identify the expected results from the actual results we have used econometric approach or model using internal financial values such as Return on Assets, Return on Capital, Income Growth Rate and Profit per Employee and also used external factors such as GDP growth rate of 83 Scheduled Commercial Banks in three different sectors that is public sector, private sector and foreign banks operating in India. Along with that we have also used the financial values and ratios obtained by Reserve Bank of India (RBI) and in analysis and interpretation of data those components are comprehensively explained and highlighted through graphs and table.

The research report consists of relevant exhibits and or graphs from the industry experts and organizations, which are well known specialist in the domain of banking their views, opinions, surveys are used where ever relevant to a certain extent and highlighted.

Even this report consists of academic and organizational literature for critical analysis of certain other factors such as Regulations, Corporate Governance, CAMELS ratings, CALCS ratings, Risk Assessment etc. Even similar previous studies are identified and highlighted regarding Market share, Mergers & acquisitions, profitability of banks in other countries and their implications on the performance of each sector related banks.

Finally we will highlight the Income growth rate (Total Income) will be affected by the market share, Investment to deposit ratios of foreign banks are efficient compared to public sector banks and private sector banks. Thus, foreign banks have impact in the Indian banking sector with more profits per employee, business per employee, Capital adequacy, low NPA levels, Asset Quality, Liquidity etc.

Keywords: Indian Banking Sector, Profitability, Public Sector Banks, Private Sector Banks, Foreign Banks, Econometric Model, Corporate Governance

Suggested Citation

Kalakkar, Sudeep, Key Factors in Determining the Financial Performance of the Indian Banking Sector (August 1, 2012). Available at SSRN: or

Sudeep Kalakkar (Contact Author)

University of East London ( email )

Longbridge Road
Dagenham, Essex, RM8 2AS
United Kingdom

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