ROA Performance of Public Sector Banks in India

Poonam Mahajan, Aparna Bhatia and Subhash Chander

The IUP Journal of Bank Management, 2012, vol. XI, issue 3, 22-35

Abstract: The paper empirically predicts the Return on Assets (ROA) performance of the public sector banks in India for the years 2005-06 and 2009-10. A sample of 27 banks is taken for the study. Backward stepwise regression analysis is used to study the impact of these determinants on the performance of the banks. ROA is taken as the dependent variable, while other variables like spread ratio, provisions and contingencies, non-interest income, credit-deposit ratio, operating expense ratio, investment-deposit ratio, capital adequacy ratio and non-performing assets have been controlled in the study. The results reveal that spread, credit-deposit ratio, non-performing assets, non-interest income and provision and contingencies have the capacity of predicting the profitability (measured by ROA) of public sector banks in India. The measured ROA reveals that the Indian banking sector remained relatively healthy during the current economic crisis, and the performance of the banks was not impacted negatively in a significant manner.

Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjbm:v:11:y:2012:i:3:p:22-35

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