A COMPARATIVE STUDY ON RETURN ON ASSETS OF DIFFERENT INDIAN COMMERCIAL BANKS

Author Name: 1. Dr. Barnali Basu (Banerjee) 2. Dr. Sanjeev Kumar Srivastaw

Volume/Issue: 01/12

Country: India

DOI NO.: 08.2020-25662434 DOI Link: http://www.doi-ds.org/doilink/05.2021-12145537/UIJIR

Affiliation:

1.  Assistant Professor in Economics, Barasat College, Kalyani Road, Barasat, Kolkata, West Bengal, India.
2. Associate Professor in Commerce, Barasat College, Barasat, Kolkata, West Bengal, India

ABSTRACT

Banks are one of the important constituents of financial sector that plays significant role in capital formation in an economy. Therefore, a comprehensive, progressive and active banking sector is required for sustainable economic growth of a country. Profitability of the banks can be examined with the help of number of parameters; one of such parameters is return on asset. The profitability of Indian commercial bank has shown marginal improvement in terms of return on assets. We have taken 15 years data (i.e., from 2004-05 to 2018-2019) of return on asset for three different banks, i.e., public sector bank, private bank, and foreign bank from RBI website. We mainly use SPSS 17 version for this analysis. We want to see whether any mean difference between public sector bank private bank and foreign bank exists with respect to Return on Asset. For this, we pursue the paired t test taking two types of Banks as a pair at a time. Then we want to rank the Return on Asset of different Banks. For this, we calculate the Cohen’s D of each pair to compare the difference, so that we can rank the return from asset of different bank. We get that, on average, return on asset of Public Sector Bank scores lowest, then, scores Private Bank, and Foreign Bank scores the highest. The correlation between return on asset of Public Sector Bank, Private Bank and Foreign Bank scores (taking two at a time), are all insignificant. Public Sector Bank score is weakly, positively correlated with both the remaining two Banks. But return on asset of Private and Foreign Bank scores is negatively correlated. The mean difference between return on asset of all the three banks’ scores are statistically significant at 95% level. Cohen’s - D effect size indicates the highest size difference exists among Public Sector Bank, and Foreign Bank, then Private Bank, and Foreign Bank, and the lowest size difference exists among Public Sector Bank, and Private Bank, spread and operating expenses have significant impact on return on asset of banks.

Key words:  Commercial Bank, Return on Asset, Profitability