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

Author

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  • Ananya Bhatia

    (Maharshi Dayanand University)

  • Jagdeep Kumar

    (Maharshi Dayanand University)

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.

Suggested Citation

  • Ananya Bhatia & Jagdeep Kumar, 2025. "Assessing the Impact of COVID-19 on Financial Performance of Public and Private Banks in India," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 23(2), pages 601-620, June.
    • Handle: RePEc:spr:jqecon:v:23:y:2025:i:2:d:10.1007_s40953-024-00437-3
    DOI: 10.1007/s40953-024-00437-3
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G01 - Financial Economics - - General - - - Financial Crises
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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