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

Authors: Shakeeb Mohammad Mir; Mariya Mushtaq Malik; Farooq Ahmad Shah

Addresses: Department of Management Studies (DMS), Central University of Kashmir, Ganderbal, India ' Department of Management Studies (DMS), Central University of Kashmir, Ganderbal, India ' Department of Management Studies (DMS), Central University of Kashmir, Ganderbal, India

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.

Keywords: banks performance; capital adequacy ratio; panel data; Indian banking industry; India.

DOI: 10.1504/AAJFA.2024.139936

Afro-Asian Journal of Finance and Accounting, 2024 Vol.14 No.4, pp.451 - 473

Received: 03 Mar 2022
Received in revised form: 31 May 2023
Accepted: 21 Jun 2023
Published online: 12 Jul 2024 *

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