Title: What determines the profitability of the Indian commercial banking sector? A macro marketing mix perspective

Authors: Bhagirath Prakash Baria; Prashant Vadikar; Hardik Bhadeshiya

Addresses: Department of Banking and Insurance, Faculty of Commerce, The Maharaja Sayajirao University of Baroda, Vadodara, Gujarat, India ' Department of Business Economics, Faculty of Commerce, The Maharaja Sayajirao University of Baroda, Vadodara, Gujarat, India ' School of Management Studies, National Forensic Sciences University, (An Institute of National Importance under the Ministry of Home Affairs, Government of India), Gandhinagar Campus, Gujarat, India

Abstract: This paper estimates the aggregate profit function of the Indian commercial banking sector for the period 2000-2001 to 2022-2023 by synthesising two fundamental perspectives - namely the marketing mix, and the macroeconomic approaches. By juxtaposing the aggregate profitability of the banking sector of India with the key marketing and macroeconomic determinants, a macro marketing view is proposed to understand what drives the performance of the Indian banking sector. The structure of our macro marketing model is clearly specified to derive the aggregate profit function by drawing inspiration from key literature in the marketing and macroeconomic schools on this issue. Econometric exercises are undertaken to provide an empirical shape to the proposed theoretical model. Results indicate that there is a stronger dominance of the macroeconomic forces in terms of the size of the macro coefficients, while there is a rich interplay of various marketing mix elements in determining the performance of the Indian commercial banking sector.

Keywords: bank profitability; econometrics; financial services cycle; Indian banking sector; macroeconomics; structure-conduct-performance hypothesis; India.

DOI: 10.1504/IJSEM.2026.153649

International Journal of Services, Economics and Management, 2026 Vol.17 No.3, pp.243 - 266

Received: 16 Sep 2023
Accepted: 17 Nov 2023
Published online: 21 May 2026 *

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