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Factors Influencing the Performance of Commercial Banks: A Dynamic Panel Study on India

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  • Sreemanta Sarkar
  • Debdas Rakshit

Abstract

The article investigates the determinants of commercial banks’ performance in India over the period from 2000 to 2017 with special reference to the macroeconomic factors. Considering return on assets (ROA), return on equity (ROE) and net interest margin (NIM) as the measure of performance, we have chosen a panel of public and private sector commercial banks of our country. Taking some macro variables such as GDP, inflation and lending interest rate as the prime explanatory variables along with some bank-specific and macroeconomic control variables, first difference generalized method of moments (GMM) method has been applied to observe the impact of these macroeconomic factors on the performance of commercial banks. Results indicate that external variables significantly affect commercial banks’ performance and these findings remain unaltered with the sequential inclusion of all control variables. This work has immense importance to the bankers, planners and policymakers in shaping appropriate policy decisions for the commercial banks.

Suggested Citation

  • Sreemanta Sarkar & Debdas Rakshit, 2023. "Factors Influencing the Performance of Commercial Banks: A Dynamic Panel Study on India," FIIB Business Review, , vol. 12(1), pages 85-99, March.
    • Handle: RePEc:sae:fbbsrw:v:12:y:2023:i:1:p:85-99
    DOI: 10.1177/23197145211021564
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    Cited by:

    1. Taslima Akther & Mushfiqur Rahman & Md. Mufidur Rahman, 2023. "Factors influencing commercial bank profitability in Bangladesh: a panel data approach," Future Business Journal, Springer, vol. 9(1), pages 1-20, December.

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