An Empirical Analysis of the Performance of Indian Commercial Banks

Abstract

The primary aim of this study is to examine the effect of bank-specific and macroeconomic determinants of Indian bank’s profitability over a period of ten years. The study classifies banks’ ownership into public banks, private banks and foreign banks. A balanced panel data of 87 banks over a period of 2009-2019 is analysed by two financial metrics i.e. Return on assets (ROA) and net interest margin (NIM). The results suggest that bank-specific variables such as asset management and operational efficiency have a significant impact on banks’ performance. Furthermore, macro-economic variables such as interest rate and exchange rates have a significant impact on the performance of banks. Moreover, the study also examines the impact of demonetisation on bank performance and conclude that demonetisation did not have a significant impact on the performance of the banks.