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An empirical analysis of the relationship between capital adequacy and performance optimisation through a comparative standpoint among banking sectors in India

Author

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  • Shakeeb Mohammad Mir
  • Mariya Mushtaq Malik
  • Farooq Ahmad Shah

Abstract

This study aims to assess the impact of capital adequacy on the performance optimisation of the Indian banking industry across and among the banking sectors. The study employs a balanced panel data regression model to examine the firm-level balanced panel data of 78 banks from the public and private sectors over 15 years (2007-2022). The findings confirm that capital adequacy significantly impacts bank profitability across the industry, but there is also a sector-specific impact. This study provides the most recent information on the differences in tactics used by public and private sector banks to maintain capital adequacy standards. Furthermore, using two-step system GMM analyses, the possibility of heteroscedasticity, autocorrelation, and endogeneity was considered.

Suggested Citation

  • Shakeeb Mohammad Mir & Mariya Mushtaq Malik & Farooq Ahmad Shah, 2024. "An empirical analysis of the relationship between capital adequacy and performance optimisation through a comparative standpoint among banking sectors in India," Afro-Asian Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 14(4), pages 451-473.
    • Handle: RePEc:ids:afasfa:v:14:y:2024:i:4:p:451-473
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