An empirical analysis of the relationship between capital adequacy and performance optimisation through a comparative standpoint among banking sectors in India

Shakeeb Mohammad Mir, Mariya Mushtaq Malik and Farooq Ahmad Shah

Afro-Asian Journal of Finance and Accounting, 2024, vol. 14, issue 4, 451-473

Abstract: This study aims to assess the impact of capital adequacy on the performance optimisation of the Indian banking industry across and among the banking sectors. The study employs a balanced panel data regression model to examine the firm-level balanced panel data of 78 banks from the public and private sectors over 15 years (2007-2022). The findings confirm that capital adequacy significantly impacts bank profitability across the industry, but there is also a sector-specific impact. This study provides the most recent information on the differences in tactics used by public and private sector banks to maintain capital adequacy standards. Furthermore, using two-step system GMM analyses, the possibility of heteroscedasticity, autocorrelation, and endogeneity was considered.

Keywords: banks performance; capital adequacy ratio; panel data; Indian banking industry; India. (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ids:afasfa:v:14:y:2024:i:4:p:451-473

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