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A Comparison of Profitability of Private Sector & Public Sector Banks in India in the Light of Covid-19 Crisis

Journal: International Journal of Mechanical and Production Engineering Research and Development (IJMPERD ) (Vol.10, No. 3)

Publication Date:

Authors : ;

Page : 11721-11732

Keywords : Profitability; Banks; Comparative Analysis; Performance and Prospects; Public and Private; Npas&Cost of Funds;

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The study compares the profitability of the Private Sector and the Public Sector Banks in India using both the bank related and the macroeconomic factors over a period of 15 years (20042019). After the COVID-19 outbreak, there are worldwidespeculations of an impending danger of a major economic crisis hitting the global economy which can have far reaching consequences on India's banking system. Hence, a comparative study of both the categories of banks in India was undertaken to analyze their profitability post the crisis. Return on Assets (ROA) was the variable used for indicating the bank's profitability and a multiple linear regression model was used for establishing a relationship between the various bank specific and macroeconomic indicators. Among the bank specific variables, Cost of funds and Net NPAs were revealed to be major factor influencing the profitability of both the categories of banks. Conversely, the macroeconomic factors such as rate of Inflation and the Annual GDP growth rate were found to influence the profitability of Public Sector Banks (PSBs) comparatively more, owing to the huge assets size and a higher contribution of PSBs in India's economy

Last modified: 2020-10-05 15:40:57