Impact of Bank-Specific Factors on Profitability of Selected Indian Commercial Banks: A Panel Data Analysis

Abstract

This study seeks to determine the determinants of Indian commercial banks profitability. There are three critical variables to assess the profitability of Indian banks: return on assets (ROA) and net interest margin (NIM). Study also considers a group of independent variables specifically bank-specific components like Capital Adequacy, Assets Quality, Assets Management, Operating Expenses, Non-Performing Asset. Panel data of 10 years applied on 10 commercial banks of India for building pooled, fixed and random effects models. The result shows that AM and OPEF emerge as applicable predictors of ROA, and NNPA is significant basis its negative influence across pooled, fixed, and random effects models. While Hausman test results indicate that fixed effects models are more appropriate for both ROA and NIM regressions.