IMPACT OF FINANCIAL CRISIS ON BOTTOM LINE OF COMMERCIAL BANKS IN INDIA: AN EMPIRICAL STUDY

Reetu Tyagi

Research Scholar, Glocal University, Saharanpur 247121, India

Dr Mazhar Iqbal

Assistant Professor, Glocal School of Business & Commerce , Glocal University, Saharanpur 247121, India

Abstract

In this paper we attempted to investigate impact of Financial Crisis on bottom line of private and foreign sector banks in India. Profitability is an important parameters among many variables on which strength of banking systems depends. In order to accomplish this study, the researchers have considered from year 2005 to 2019  and empirical evidences were drawn using panel regression model.  In the current study nine Variables were considered to examine the impact of financial crisis on profitability. Two of them is dependent variables, namely, return on assets and return on equity. Rest seven are independent variables, of which, asset quality, efficiency, bank capital and bank size are bank-specific variables that are considered as control variables and  next two financial crisis and  ownership as dummy variables. Average ROA indicates low profitability for sample banks throughout the period of with substantial variations among banks. The result of correlation indicates that no two variables are highly correlated. ROA is negatively correlated with all the determinants except capital adequacy ratio (CAR). There is an insignificant positive impact of crisis on banks’ profitability. The ownership structure indicates private banks are sound in maintaining their liquidity and private banks in earning capabilities during financial crisis.

Keywords: Financial Crisis, Bottom line, Panel Data Analysis, Commercial Banks