Assessing the Impact of COVID-19 on Financial Performance of Public and Private Banks in India

Ananya Bhatia () and Jagdeep Kumar ()
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Ananya Bhatia: Maharshi Dayanand University
Jagdeep Kumar: Maharshi Dayanand University

Journal of Quantitative Economics, 2025, vol. 23, issue 2, No 11, 620 pages

Abstract: Abstract This study examines the impact of the COVID-19 pandemic on the financial performance of 31 banks (12 public and 19 private banks) in India, over a period from 2010 to 2023. Through system GMM model, the study evaluates the effects of bank-specific and macroeconomic factors on Return on Assets (ROA) and Return on Equity (ROE). The findings revealed that Non-Performing Net Assets (NNPA), Capital Adequacy ratio (CAR), Operating Expense to operating Profit significantly affected ROA and ROE. Moreover, results showed that COVID-19 negatively and significantly affected the banks performance with a stronger impact on ROE. However, Credit-Deposit Ratio (CDRatio), Bank size, GDP and inflation have no significant impact on the bank performance. Overall, the analysis suggests that liquidity and bank size have limited effects on performance. The findings emphasize the critical role of asset quality and capital reserves in ensuring bank stability, particularly during economic stress, like the pandemic.

Keywords: COVID-19; Financial performance; ROA; Public banks; Private banks; Panel data; Macro economic variables (search for similar items in EconPapers)
JEL-codes: C23 E51 G01 G21 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s40953-024-00437-3

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