Profitability and productivity management of commercial banks in the post reform era

Abstract

In the changing paradigm of the Indian Banking, this study has focused on the profitability and productivity of commercial banks. Most of the previous studies on performance evaluation of commercial banks in India were conducted before liberalization and only a few researches are conducted after reforms. In measuring the efficiency especially in commercial banks in India the study on both profitability and productivity is rare. The contribution of the banking sector in the process of economic development is very important. Most of the reforms measures in the banking sector were put in place with decisive emphasis on enhancing productivity and increasing profitability. As the banking sector reforms have been concerned with improving the policy framework, the financial health, and the institutional infrastructure, it is imperative to study profitability and productivity analysis in the post reforms era. newlineAn extensive literature review has been conducted on measuring both profitability and productivity of commercial banks and the following research gap has been identified. India is an emerging market and commercial banks are considered as the backbone of economic development. Firstly, there have been few studies focusing on both profitability and productivity of commercial banks in India after reforms, which is a large gap. Secondly until banking sector reforms ( 1998), the banking system has not given emphasis on structural measures and improvement in standards of disclosure and level of transparency in order to align Indian standards with International best practices. Thirdly, the earlier studies of performance evaluation of banks through the parameters of profitability and productivity in the wake of new banking philosophy, was in general and not comparative. newline