Sinha, Pankaj and Dutta, Dipanwita (2011): Modelling profitability of Indian banks.
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This paper identifies the key determinants of profitability of Indian banks. It integrates the macroeconomic environment and industry level variables of India for predicting profitability of Indian banks. A simultaneous equation system has been formulated to derive the estimates of net interest income (NII) and Credit for the banking system as a whole. Net interest income as well as efficiency ratio have significant role in determining profitability in Indian banking scenario. The Net interest income reacts inversely to bond yields and positively to credit. This stems from the inverse relationship of credit demand to bond yields and positive relationship of GDP with credit creation. Further, Deposit mix (higher share of low cost deposit in the total deposits) has favourable impact on NII%.
|Item Type:||MPRA Paper|
|Original Title:||Modelling profitability of Indian banks|
|English Title:||Modelling profitability of Indian banks|
|Keywords:||Profitability, Net Interest Income, GDP, Interest Rate, Efficiency Ratio|
|Subjects:||G - Financial Economics > G2 - Financial Institutions and Services
C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models; Multiple Variables
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages
|Depositing User:||Pankaj Sinha|
|Date Deposited:||27. May 2011 14:24|
|Last Modified:||12. Feb 2013 02:08|
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