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An Empirical Analysis of Profitability Determinants in Indian Commercial Banks During Post Reform Period

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Author Info
Siva Reddy Kalluru
Sham Bhat K
Abstract

This paper examines profitability determinants in Indian commercial banks by employing fixed and random effects models for an unbalanced panel data of 87 commercial banks for the period 1992-2006. Two alternative measures of bank profitability such as Returns on Assets (ROA) and Returns on Capital (ROC) are used. The empirical results reveal that the profitability of banks was affected not only by banks’ own characteristics but also by industry structural variables and macroeconomic variables. Bank ownership and political parties in power also play a vital role in determining bank profitability in India. However, the determinants of bank profitability vary significantly across the banks groups.

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Publisher Info
Article provided by Icfai Press in its journal The Icfai University Journal of Industrial Economics.

Volume (Year): V (2008)
Issue (Month): 4 (November)
Pages: 37-56
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Handle: RePEc:icf:icfjie:v:05:y:2008:i:4:p:37-56

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