THE IMPACT OF CAPITAL ADEQUACY RATIO UNDER BASEL II ON THE DETERMINANTS OF PROFITABILITY RATIOS OF PUNJAB NATIONAL BANK

Risks to a bank are responsible for an adverse impact on the capital and profitability. The profitability ratios play an important role in deciding the strength of a bank over the years. The present study has been carried out to observe the impact of capital adequacy ratio on the profitability ratios of Punjab National Bank during the implementation period of Basel II. The relationship between the Capital adequacy ratio and profitability ratios has also been explained in the present study. The profitability ratios like Dividend Payout Ratio, Return on Equity have shown decreasing trend during the Basel II period whereas ratios like Return on Capital Employed, Return on asset, Earning per Share and Dividend Payout Ratio have not shown consistent decrease.