Growth, Profitability and Productivity in Public Sector Banks: An Assessment of Their Interrelationship

Dhananjay Bapat

The IUP Journal of Bank Management, 2013, vol. XII, issue 3, 49-57

Abstract: The study examines the relationship among growth, profitability and productivity for Indian public sector banks. For measuring profitability, Return on Assets (ROA) was selected and for assessing productivity, business per employee and profit per employee were used as measures. We chose Indian public sector banks as they contribute 74.20% to total deposits of scheduled commercial banks and 75.07% to the total credit of scheduled commercial banks. The study intends to assess whether differing growth rates of Indian public sector banks have any impact on profitability and productivity. During the study period (2005-2012), the business of the Indian public sector banks grew at a compounded annual growth rate of 18.7%. The study concludes that change in growth rates does not significantly affect the profitability. The business per employee and profit per employee for public sector banks remained higher for banks with higher growth rates. We observed significant differences for business per employee for all the years and for profit per employee for four out of seven years.

Date: 2013
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