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Income diversification and bank profitability: exploring the importance of macroeconomic factors in India

Year: 2024

Type: article

Abstract: Financial reforms in India intensified competition between bank ownership groups, resulting in narrowing of interest margins and forcing banks towards non-interest income (NII).Surging non-performing loans (NPLs) also pushed banks to diversify their incomes.This study employs panel data analysis to investigate the impact of income-diversification strategies of public, private and foreign banks in India during 2005-2020.Trends in NII have been explored, along with bank-specific and macroeconomic variables to study their impact on bank profits.Finally, inclusion of monetary and fiscal policy variables highlighted the importance of inflation on the banking sector, but its impact varied across ownership groups.

Source: International Journal of Business and Emerging Markets

DOI: 10.1504/ijbem.2025.142928

Authors: Ajit Karnik, Sudipa Majumdar

Institution: Symbiosis International University

Language: English

Topic: Banking Sector Performance and Management

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: bronze

OpenAlex ID: W4404966910

FWCI: 2.038

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Cited by: 2

Related to: 10