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A Study of Value – Added Efficiency in the Indian Banks


Affiliations
1 Lecturer, CCBA, Dhofar University, PB 2509, Salalah 211, Oman
2 Assistant Professor, Department of Management Studies, Faculty of Management & Commerce MS Ramaiah University of Applied Sciences New BEL Road, Bangalore, India
 

Purpose: This paper explores the importance of Intellectual Capital (IC) in the Indian Banking Industry and compares the efficiency between Public Sector Undertaking (PSU) banks and Private Sector banks, by employing Value Added Intellectual Coefficient (VAIC) method.
Methodology/approach: Using Path Analysis, the study verifies the influence of VAIC on the profitability and market value of the Indian banks. Using simple averages and graphs, VAIC of PSU and Private Banks are compared. Quarterly results are used to verify the impact of COVID on the VAIC of banks.
Findings: Human Capital Efficiency (HCE) is the largest element that contributes to the VAIC in the Indian Banks. VAIC and HCE are greater in the private sector banks than in PSU banks. HCE does contribute to the profitability of banks, whereas no evidence is found of VAIC or HCE making any contribution towards the market value. While VA and HCE fell sharply in the PSU banks and not so sharply in the Private Banks during the first wave of COVID, the recovery has been impressive, in both sectors.
Practical implications: The paper clearly brings out the role of Human Capital Efficiency (HCE) in the Indian Banks and the need to improve HCE in the PSU Banks.

Keywords

Value Added, Banking, Profitability, Market Value, Human capital
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  • A Study of Value – Added Efficiency in the Indian Banks

Abstract Views: 62  |  PDF Views: 17

Authors

Shireen Rosario
Lecturer, CCBA, Dhofar University, PB 2509, Salalah 211, Oman
Chandra Sen Mazumdar
Assistant Professor, Department of Management Studies, Faculty of Management & Commerce MS Ramaiah University of Applied Sciences New BEL Road, Bangalore, India

Abstract


Purpose: This paper explores the importance of Intellectual Capital (IC) in the Indian Banking Industry and compares the efficiency between Public Sector Undertaking (PSU) banks and Private Sector banks, by employing Value Added Intellectual Coefficient (VAIC) method.
Methodology/approach: Using Path Analysis, the study verifies the influence of VAIC on the profitability and market value of the Indian banks. Using simple averages and graphs, VAIC of PSU and Private Banks are compared. Quarterly results are used to verify the impact of COVID on the VAIC of banks.
Findings: Human Capital Efficiency (HCE) is the largest element that contributes to the VAIC in the Indian Banks. VAIC and HCE are greater in the private sector banks than in PSU banks. HCE does contribute to the profitability of banks, whereas no evidence is found of VAIC or HCE making any contribution towards the market value. While VA and HCE fell sharply in the PSU banks and not so sharply in the Private Banks during the first wave of COVID, the recovery has been impressive, in both sectors.
Practical implications: The paper clearly brings out the role of Human Capital Efficiency (HCE) in the Indian Banks and the need to improve HCE in the PSU Banks.

Keywords


Value Added, Banking, Profitability, Market Value, Human capital

References