International Journal of Financial Management

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A Study of Impact of Leverage on the Profitability of Indian Banking Industry


Affiliations
1 Director, Roorkee Collage of Management & Computer Application Roorkee
2 Director, Narvadeshwar Management College, Lucknow
3 Assist. Professor, S.B College, Vikas Nagar, Uttrakhand
     

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With increasing Industrialization, investment decisions in banking sector becoming more critical. Ever since Indian economy adopted globalization and opened its doors to MNCs, the Indian banking industry has been witnessing new products, efficient services and stiff competition. Its survival in competitive environment largely depends on its efficient fund generation policies, profitability and efficient management which requires a careful analysis of the profitability, competitive policies and massive investment which can be achieved with reliable saving and investor's durability to absorb competitive market risks. Thus in the light of recent developments, a careful analysis of the profitability of Indian banking sector is inevitable. The present study attempts to analyze the leverage position of Indian banking industry and its impact on EPS, its risk and return and profitability. For the purpose10 year data from 2000-01-20009-10 of ten Indian banks SBI, BOB, AB, SB, ICICI, HDFC, DB, CB, IDBI, and OBC have been taken, the value of leverages has been calculated and on the calculated leverages value Mean, Standard deviation, Skewness and Kurtosis has been calculated. After the calculation of the leverages relationship has been calculated of all leverage with EPS value.

Keywords

DFL, OL, CL, EPS, Correlation, SBI, BOB, AB, SB, ICICI, HDFC, DB, CB, IDBI, and OBC
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  • A Study of Impact of Leverage on the Profitability of Indian Banking Industry

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Authors

S.M. Tariq Zafar
Director, Roorkee Collage of Management & Computer Application Roorkee
Adeel Maqbool
Director, Narvadeshwar Management College, Lucknow
Anju Fortyal
Assist. Professor, S.B College, Vikas Nagar, Uttrakhand

Abstract


With increasing Industrialization, investment decisions in banking sector becoming more critical. Ever since Indian economy adopted globalization and opened its doors to MNCs, the Indian banking industry has been witnessing new products, efficient services and stiff competition. Its survival in competitive environment largely depends on its efficient fund generation policies, profitability and efficient management which requires a careful analysis of the profitability, competitive policies and massive investment which can be achieved with reliable saving and investor's durability to absorb competitive market risks. Thus in the light of recent developments, a careful analysis of the profitability of Indian banking sector is inevitable. The present study attempts to analyze the leverage position of Indian banking industry and its impact on EPS, its risk and return and profitability. For the purpose10 year data from 2000-01-20009-10 of ten Indian banks SBI, BOB, AB, SB, ICICI, HDFC, DB, CB, IDBI, and OBC have been taken, the value of leverages has been calculated and on the calculated leverages value Mean, Standard deviation, Skewness and Kurtosis has been calculated. After the calculation of the leverages relationship has been calculated of all leverage with EPS value.

Keywords


DFL, OL, CL, EPS, Correlation, SBI, BOB, AB, SB, ICICI, HDFC, DB, CB, IDBI, and OBC

References