Comprehensive Project Report

On

A Study of impact of capital structure on the profitability of

private sector banks in India

Submitted to

Shri Vaishnav Institute of Management

Under the Guidance of

Dr. Sapna Parihar

In Partial Fulfillment of the Requirement of the Award of the Degree of

Master of Business Administration (MBA FT)

Offered By

Devi Ahiliya Vishwavidhyalaya

University

Prepared By:

Anshika Neema (220400087)

MBA FT (Semester – lV)

May, 2022-2024
 Student Declaration

I hereby declare that the Comprehensive Project Report titled “A Study of impact of capital
structure on the profitability of private sector banks in India.” is a result of our own work
and indebtedness to other work publications, references, if any, has/have been duly
acknowledged. If we are found guilty of copying from any other report or published
information and showing as our original work, or extending plagiarism limit, we understand
that we shall be liable and punishable by the university, which may include ‘Fail’ in
examination or any other punishment that university may decide.

Place: Indore Date:

 Institute Certificate

“This is to Certify that this Comprehensive Project Report titled “A Study of impact of
capital structure on the profitability of private sector banks in India.” it is the bona fide work
of Anshika Neema who has carried out her project under my supervision. I also certify
further that, to the best of my knowledge, the work reported here in does not form part of
any other project report or dissertation on the basis of which a degree or award was
conferred on an earlier occasion on this or any other candidate. I have also checked the
plagiarism extent of this report which is % and it is below the
Prescribed limit of 30%. The separate plagiarism report in the form of html /pdf file is
enclosed with this.

Rating of Project Report [A/B/C/D/E]: (A=Excellent; B=Good; C=Average;

D=Poor; E=Worst) (By Faculty Guide)

Signature of the Faculty Guide/s

(Name and Designation of Guide/s)

Signature of Principal/Director with Stamp of Institute

(Name of Principal / Director)

 Certificate of Examiner

This is to certify that project work embodied in this report entitled “A Study of
impact of capital structure on the profitability of private sector banks in India”
was carried out by Anshika Neema of Shri Vaishnav Institute of Management.

The report is approved / not approved. Comments of External Examiner:

This report is for the partial fulfillment of the requirement of the award of the degree
of Master of Business Administration offered by Gujarat Technological University.

(Examiner’s Sign)

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Institute Name:

Institute Code:

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6
 Preface

As a part of the MBA curriculum and in order to gain practical knowledge in the field of
management, we are required to make a report on the study of “A Study of impact of capital
structure on the profitability of private sector banks in India.” The main purpose of preparing
this project report is to impact of capital structure on the profitability.

We have included various concepts, meanings and effects of capital structure in this project
report. It helps to gain practical knowledge in a given area based on theoretical knowledge.

The implementation of this project report helped us improve capital structure. The knowledge
and experience gained from this report will be very useful to us in the future.

7
 Acknowledgement

It is my pleasure to be indebted to various people, who have directly or indirectly contributed

in the development of this work and who influenced my thinking, behaviour, and acts during
the Course of study.

“Comprehensive Project Report” is one of the Project of M.B.A. Program. I am much obliged
to express my deep gratitude to all the personalities who gave their cooperation and guidance
for this project. This report is impossible without the cooperation of certain people.

I also extend my sincere appreciation to Dr. Sapna Parihar who as a technical guide provided
her valuable suggestions and precious time in accomplishing my project report. I would also
like to thank my colleagues for being with me and supporting me during the internship.

Thank you,

ANSHIKA NEEMA

8
 Table of Content

No Particulars No. of Page

Student’s declaration I
Institute certificate II
Certificate of examiner III-VII
Plagiarism report VIII
Preface IX
Acknowledgement X
Executive summary XII
1 Introduction: 10
Introduction of topic 11
History evaluation 12
Porter’s five force(Industry) 19
SWOT Analysis 21
Challenges of Industry 23
Advantages 25
Capital Structure 27
Need of the study 40
Importance of the study 40
Identification of problem 40
Research Questions 40
2 Literature Review 41
Review of literature 42
Research Gap 48
Measurement model 49
3 Research Methodology 55
Research objectives 56
Research Design 57
4 Data Analysis 58
5 Findings, Suggestions 85
6 Conclusion 89
7 Bibliography 91

9
 Chapter-1
Introduction

10
 1. Introduction of topic

The present study aim to the Understand comparative analysis of the capital structure and its
impact on the profitability of Privet Banks. This report is conducted to measure and compare
the performance of 5 Indian privet banks, the period of 2017–2021.

Industrial analysis of private banking sectors is conducted in the first tier, followed by an
individual bank-level analysis in the second tier. Data analysis consists of deposits, assets, and
equity as inputs to measure the outputs by practicing data envelopment analysis techniques.

In this study, 'Capital’ Structure' refers to the proportion between the various long-term
sources of finance in the total capital of the firm includes 'Proprietor's Funds' and 'Borrowed
Funds'(Proprietors Funds include equity capital, preference capital, reserves and surpluses
retained earnings and Borrowed Funds include long-term debts such as loans from financial
institutions, debentures, est.

Today business organizations use a range of alternatives for collecting the funds. Small and
Big organizations used the way of collecting funds according to their paying capacity, degree
of risk, size of capital, working system of the business etc.

11
 2. Historical evaluation

History of Banking in India – Pre and Post-Independence

1. Pre Independence Phase

The History of Modern Banking in India began with the birthing of the Bank of Hindustan in
1770 in Calcutta. Unfortunately, its longevity was cut short when it got liquidated in 1832. In
an attempt to follow its footsteps; 2 Banks were formed but both were not successful either.
They were The General Bank of India (1786-1791) and the first commercial bank of India;
Oudh Commercial Bank (1881-1958). However, there were other banks who followed the
footsteps and still function to this day. They include The Bank of Baroda (est. 1908) and the
Allahabad Bank (est. 1865 now branch of Indian Bank). Also, Punjab National Bank (est.
1894), Bank of India (est. 1906) and the Central Bank of India (est. 1911).

Some banks had even merged. The Bank of Bombay, The Bank of Bengal and the Bank of
Madras merged and formed a single entity called The Imperial Bank (currently known as
State Bank of India) in 1921. In April of 1935, The Reserve Bank of India (RBI) was formed
based on the recommendation of the Hilton Young Commission.

These events formed the roots of the Banking Sector we have all come to know and trust
today. Although, that was not the case back then. The concept of Banks and Banking was
relatively new to the largely uneducated masses of India, so they mostly relied on
Moneylenders and Relatives to borrow money. A lot of the times, these moneylenders ended
up being exploitative and charging huge interest rates. This brings us to the next phase.

2. Post-Independence

This is the second stage in the evolution of banking. This marked the beginning of the
exponential growth of the banking sector. The most striking event at this stage was the
nationalization of banks. The need to nationalize banks is very important. Lenders are too
exploitative and poor people can no longer afford to repay bank loans due to lack of collateral.
The banks themselves selectively serve large businesses and enterprises. The slowdown in
agriculture, small industry and export sectors had a negative impact. The first case of bank
nationalization occurred in 1949, when the Reserve Bank of India (RBI) was nationalized.

The second and perhaps more important case was the nationalization of 14 commercial banks
in 1969 and 6 commercial banks in 1980. The third case is the creation of the Regional
12
People's

13
Credit Bank (RBN) under the Narashimam Committee in 1975. The bank was established to
serve rural communities and promote financial inclusion.

The fourth case is very important, and to this day it is the driving force behind economic
growth. This includes creating different peak banks for specific sectors. In 1982, the National
Bank for Agricultural and Rural Development (NABARD) was established. The Export-
Import Bank (EXIM) was established in 1982, the National Housing Bank (NHB) in 1988 and
the Small and Medium Business Bank of India (SIDBI) in 1990. The consequences of the
nationalization policy were different. As public confidence grew, so did the efficiency of the
banking system, and more money was invested in agriculture and small and medium-sized
enterprises (SMEs).

The third stage in the development of banking saw tremendous growth due to economic
liberalization in 1991. Despite liberalization and political change, large segments of the
population still do not enjoy the privilege of access to financial services. With this in mind,
the Narashima committee approved the entry of private banks into the banking business.
Initially, it was allowed to create 10 banks. Only five survived under market conditions.
ICICI, IndusInd Bank, Axis Bank, DCB and HDFC. A few years later, Bank Kotak Mahindra
and Bank Yes were founded.

A tertiary banking license was obtained in 2013–2014, and in 2015 IDFC Bank and Bandhan
Bank were merged. To encourage access to financial services, the RBI proposes the creation
of two new types of banks: small banks and payment banks. Then in 2015, 11 companies
received permission to create a settlement bank. In principle, the establishment of a
microfinance bank is limited to 10 people. In August 2019, the government decided to merge
10 public sector banks into four. This will reduce the number of public creditors from 21 to
12. This will contribute to better wealth management. The merger will take effect on April 1,
2020.

3. Nationalisation in the 1969

The first nationalized bank in India was the Reserve Bank of India, which opened in January
1949. Another 14 banks were also nationalized in July 1969. Bank of India, PNB and many
other banks were part of this nationalization. In the next stage of nationalization in 1980, six
more commercial banks were nationalized. These include Vijaya Bank, New Bank of India,
Corporation Bank and others.

The need to nationalize banks arose for a number of reasons. They meet the needs of large
trading companies and large industries. Sectors such as exports, agriculture and small-scale
14
manufacturing also lag behind. Creditors take the poor to India. All this was taken into
account during the nationalization of the bank.

15
A Regional Rural Bank (RRB) for rural India was also established. Its purpose is to serve a
large rural population without a community. In addition, industry requirements such as
foreign trade, housing and agriculture have been met. This was achieved through the creation
of NABARD, NCB, SIDBI and EXIM.

4. Liberalization

Liberalization refers to the loosening of former state restrictions, primarily in the area of
social or economic policy. In some contexts, this process or concept is often referred to as
deregulation, but this is not always the case. In the field of social policy, this may include the
relaxation of restrictive legislation. The term is most commonly used to refer to economic
liberalization, especially trade liberalization or capital market liberalization.

According to the report of the Narsimam Commission (December 1991), the liberalization of
the Indian banking sector began in 1992. The report of the Narsimam Committee for 1991
formed the basis of the first reforms in the banking sector. Over the next few years, reforms
covered the areas of interest rate deregulation, targeted credit regulation and deregulation of
legal priorities and access to domestic and foreign banks. The goals of banking sector reform
are consistent with the broader goals of the 1991 economic reforms of opening up the
economy, expanding the role of markets in pricing and allocating resources, and strengthening
the role of the private sector.

The Narsimhan Committee was first established in 1991 under the leadership of Mr Nara
Shimham, the 13th Governor of the Central Bank. Only a few of his recommendations led to
banking reform in India, while others were not taken into account at all. Therefore, in 1998 a
second committee was established. When it comes to advice on bank restructuring, freedom
of government and increased regulation, the RBI plays an important role. If the main
recommendations of this committee are accepted, it will help make Indian banks more
profitable and efficient. (https://m.rbi.org.in//scripts/publicationsview.aspx?id=10487)

5. Globalization
Globalization is the consolidation of national economies, cross-border trade and cross-border
flows of capital, technology and people. Trade and finance have undoubtedly always been the
driving force behind globalization. That is why the greatest impacts of globalization are
observed in the manufacturing, industrial and banking sectors.

Narasimham Committee-I

16
A nine-member high-level committee led by Narasimham was formed in accordance with his
recommendations to revitalize the country’s banking and financial sectors. We recommend
creating a four-level hierarchy with three or four banks above and below the Agricultural
Bank. You need to remove the branch permission policy. Interest rates should be deregulated.
Supervisory functions of banks and financial institutions should be carried out by semi-
autonomous bodies sponsored by the RBI. Stimulate competition among financial institutions
by encouraging private companies to enter the market. Create an asset recovery fund to
manage that part of the bank's loan portfolio that is difficult to recover. This gradually reduces
the ratio of cash reserves to mandatory liquidity ratios.

The Banking and Financial Institutions Debt Collection Act, 1993 was enacted to expedite the
repayment of the debts of banks and financial institutions and has six courts and a court of
appeal. The proposed commercial bank would be given free rein, such as opening new
branches or closing unsuitable ones. Provincial banks were set up to turn rural savings into
investments. Finally, the RBI created an independent supervisory department to oversee
commercial banks.

Narasimham Committee -II

After the first report, apart from these changes, the Indian economy also witnesses huge
changes under LPG reforms i.e. Liberalisation, Privatisation and Globalisation. The entry of
foreign banks and the survival of Indian banks in the current form was threatened thus, the
committee was established again.

This sector can be strengthened by bringing together strong and strong banks, as well as weak
and weak banks, to create a larger client base and resources, that is, larger banks with a
multiplier effect. Narrow banking should be done with weaker banks. Only low risk loans are
accepted. Capital adequacy requirements should take into account market risk as well as
existing credit risk.

Banking laws such as the Banking Regulation Act and the RBI Law need to be amended.
State guarantees provided and their default risk weights for the country should be calculated
as for any other advance. A higher capital adequacy ratio should be established, the minimum
capital to risk assets ratio increased to 10%. Instead of states, public entities must meet their
capital market credit requirements. An asset should be classified as doubtful if it was initially
included in the ‘inferior’ category for 18 months and possibly 12 months when identified but
not depreciated.

Basel norms:
17
The Basel Norm is a global standard that has been approved and adopted by several banks,
and the purpose of establishing these norms is to strengthen coordination between central
banks around the world. He also wants to promote transparency in the banking sector and
trust banks to recover from financial shocks. They are issued by the Basel Committee for
Banking Supervision.

Basel I norms:

The Base I standard came out in 1988 and focuses on credit risk and maintaining adequate
capital. The equity ratio is 8%. Capital has been classified as Level 1 and Level 2. Level 1 is
the bank’s constant and reliable fixed capital, including equity and disclosed reserves, while
Line 2 is additional capital, including provisions for NPAs, non-exchangeable cumulative
preferred stock, undisclosed reserves. Bank deposits are classified into 5 categories, 0%, 10%,
20%, 50% and 100% depending on the percentage of risk. India adopted the Basel I
framework in 1992-93 under RBI guidelines, compliance is one phase for banks with a
foreign presence, the deadline is March 1994 and the other can be met by March 1996.

Basel II norms:

Minimum Capital:

A minimum equity ratio of 8% of risk weighted assets must be observed. The two Basel 2
capital categories created by Basel I also create Level 3 for short-term subordinated loans.

Regulatory Requirement:

Banks should also develop and practice techniques for the management of credit risk, market
risk and operational risk. The most important risk indicators must be identified and a standard
approach developed.

Market Discipline:

Finally, many disclosure requirements such as CAR, Risk Exposure, etc. has been added. to
the central bank. This should increase transparency in the banking sector and allow the central
bank to monitor the position of commercial banks. India adopted the Basel II standard in 2009
in accordance with the RBI guidelines.

Basel III norms:

Basel III was introduced after the financial crisis of 2007-8, 2010. The norm increased the
capital adequacy ratio to 12.9%. Tier 1 and Tier 2 capital ratios must be maintained at a
minimum of 10.5% and 2%, respectively.

18
In addition, a capital conservation buffer of 2.5% and a countercyclical buffer of 0-2.5%
should be maintained. Two types of liquidity metrics are required to maintain the Liquidity
Coverage Ratio (“LCR”) and the Net Funds Stability Ratio (“NSFR”). The RBI has issued a
regulation to implement Basel III capital requirements, the deadline was originally March
2019 but has been pushed back to March 2020. (https://blog.ipleaders.in/indian-banking-
sector-and- globalisation/)

6. Structure of India banking

The banking industry plays a dynamic role in the economic development of the country. The
history of economic growth depends on the stability of the banking sector. Banks act as
warehouses and energy houses for the nation’s wealth. They accept deposits from individuals
and corporations and lend to companies. They use the collected funds for productive
purposes, helping to accumulate capital in the country. Today, the Indian banking system is
known worldwide for its reliability. The Reserve Bank of India is the central/supreme bank
that regulates the operations of all banks operating in India.

The banking system consists mainly of scheduled banks (banks listed in the second list of the
RBI Act of 1934). The unscheduled bank is a very small component (acting like a local bank).

19
Planning banks are also divided into commercial banks and cooperative banks, the main
difference being the parent company model. The Cooperative Bank is a cooperative credit
institution registered under the law on cooperatives and operating on the principle of
cooperative administrative assistance.

(https://www.moneyworks4me.com/investmentshastra/indian-banking-industry-indian-banks-
structure-business-model/)

20
 4. Porter’s Five forces Analysis of Banking Industry in India

1. Threat of New Entrants

Although it is not possible for the average person to come and open a bank, there are services
such as online bill payment that entrepreneurs can take advantage of Banks are afraid of being
kicked out of the payments business because they are a good source of fee income. Another
threatening trend is companies offering other financial services. Also, when analyzing
regional banks, it should be borne in mind that the potential entry of large banks is a real
threat. The main threats to the Indian banking industry are foreign players and non-banking
financial institutions.

21
2. Bargaining power of Suppliers

Investors may not be very intimidating, but the threat of human capital from vendors is a
threat. In Indian banking, the RBI acts as a regulator and poses a serious threat to banks as
creditors.

3. Bargaining Power of Buyers

A person does not pose a huge threat to banking, but a relatively high exchange rate is an
important factor influencing purchasing power. If one has mortgages, auto loans, credit cards,
checking accounts and mutual funds in one bank, it is very difficult to move to another bank.
Banks are working to reduce switching costs to attract customers, but many people still
choose to stay at their current bank. Conversely, large corporations cheated the bank.

4. Threats of Substitutes

As you can imagine, there are many substitutes in the banking industry. Banks offer a variety
of services in addition to deposits and loans, but it is likely that there are non-bank financial
companies that can provide these services, be it insurance, mutual funds, or fixed income.
With regard to corporate credit, banks are seeing increased competition from non-traditional
companies. All offer concessional financing for customers who purchase large tickets.

5. Competitive Rivalry

The banking sector is very competitive. The financial services industry has been around for
hundreds of years, and almost everyone who needs banking services already has one.
Therefore, banks should strive to acquire customers of their competitors. Larger banks prefer
to acquire or merge with other banks rather than spend money on marketing and advertising.
(https://www.edrawmind.com/article/porters-five-forces-analysis-definition-and-
examples.html)

22
 5. SWOT Analysis of Banking Industry in India

1. Strengths

The bank changed its structure and system. Banking has become one of the most widespread
and recognized industries. Humanity also rejoices. Banking has been adjusted and updated for
the new requirements. Banks play an important and essential role in modern society, ranging
from the habit of saving to supporting people with financial instruments.

Banks offer their customers various financial products. Term deposits, stocks, bonds,
insurance and savings accounts are a variety of products offered by banks. Banks have also
adopted and implemented digital technologies to provide online banking solutions.

2. Weaknesses

The major weakness of the banking sector is NPAs (Non-Performing Assets). Typically,
NPAs denote loans that are not recoverable. This leads to financial losses for the bank,
inevitably. For the banking sector and the economy as a whole, NPAs can have a debilitating
impact. Developing countries like India face instances of high NPAs that have dealt a
significant blow to the nation’s banking industry.

23
In most countries, it has been observed that the banking sector is more concentrated in urban
areas, while ignoring rural areas. This is a serious shortcoming of the banking sector. Most of
the world’s population now lives in villages. More in developed countries. Banks operate in
the mainstream and do not want to focus on mass flows. Banks should try to conquer the rural
market.

3. Opportunities

The banking industry has always been based on technology. It is clear that the digital services
provided by banks today are entirely based on technology. However, banks must continue to
implement the latest technological advances. To attract future generations, you need to focus
on introducing new products and services.

One of the weaknesses of the banking sector is its limited presence in rural areas. But this
vulnerability may actually be an opportunity. The Bank will significantly expand its client
base by expanding its presence in villages and servicing rural residents.

4. Threats

The current banking industry relies entirely on the cyber-world. Whether it is data storage,
monetary transactions or personal information, everything is stored digitally.

This makes the banking sector a primary target for hackers who are seeking to benefit
financially by leveraging flaws in the banks digital infrastructure. Unless banks take effective
cyber security steps to safeguard their records, they will face a significant cyberspace threat.
The world is going through difficult economic times. The international banking sector has
been hit by trade wars, protectionist measures and recession. Unless global economic
conditions change, the future of banking will be bleak.
(https://medium.com/thrive-global/how-to- complete-a-personal-swot-analysis-2f8769aebd5e)

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 6. Challenges of Industry

1. Changing Business Models

The cost of compliance management is just one of the many challenges in banking that are
forcing financial institutions to change the way they do business. Rising cost of capital,
declining return on equity (ROE) and shrinking equity, coupled with persistently low interest
rates, have put pressure on banks' traditional sources of profitability. However, shareholders'
expectations remain unchanged.

2. Rising Expectations

Today’s consumer is smarter, savvier, and more informed than ever before and expects a high
degree of personalization and convenience out of their banking experience. Changing
customer demographics play a major role in these heightened expectations: With each new
generation of banking customers comes a more innate understanding of technology and, as a
result, an increased expectation of digitized experiences.

3. Customer Retention

Financial services customers expect personalized and meaningful experiences through simple
and intuitive interfaces on any device, anywhere, and at any time. Although customer
experience can be hard to quantify, customer turnover is tangible and customer loyalty is
quickly becoming an endangered concept. Customer loyalty is a product of rich client
relationships that begin with knowing the customer and their expectations, as well as
implementing an ongoing client-centric approach.

4. Outdated Mobile Experiences

Every bank or credit union today has its own mobile app, but just because an organization has
a mobile banking strategy doesn't mean it's being used to its full potential. The bank's mobile
interface must be fast, easy to use, full-featured (online chat, digital assistance via voice
assistant, etc.), secure, and regularly updated to keep customers happy.

5. Security Breaches

With a number of significant innovations in recent years, security has become one of the
biggest concerns in the banking industry and a major concern for bank and credit union
25
customers.

26
6. Continuous Innovation
Sustainable success in business requires insight, agility, rich client relationships, and
continuous innovation. Benchmarking effective practices throughout the industry can provide
valuable insight, helping banks and credit unions stay competitive. As the cliché goes,
businesses must benchmark to survive, but innovate to thrive; innovation is a key
differentiator that separates the wheat from the chaff.

7. Increasing Competition
New industry entrants are forcing many financial institutions to seek partnerships and
acquisition opportunities as a deterrent. In fact, Goldman Sachs itself has made headlines
recently with its massive investment in fintech. To remain competitive, traditional banks and
credit unions must learn from the success of Fin Tech by providing customers with a simple
and intuitive interface.

8. Cultural Shift

In the digital world, there is no place for manual processes and systems. Banks and credit
unions should think about technological solutions to the problems of the banking industry.
Therefore, it is important for financial institutions to create a culture of innovation that
maximizes efficiency through the use of technology to streamline existing processes and
procedures. This cultural shift in technology primarily reflects the widespread acceptance of
digital transformation across industries.

9. Regulatory Compliance

Regulatory compliance has been one of the banking industry’s biggest challenges since the
2008 financial crisis due to a sharp rise in regulatory costs on credit gains and losses. From
the Board of Financial Accounts to Losses on Credit (CECL), Authorization for Losses on
Loans and Leases (ALLL), there are a growing number of rules that banks and credit unions
must comply with. Compliance can be resource intensive and often depends on the ability to
correlate data from disparate sources. (https://global.hitachi-solutions.com/blog/top-10-
challenges- banking-financial-organizations-can-overcome/)

27
 7. Advantages

1. Safety of Public Wealth

Before the modern banking system was introduced, people kept their money in the form of
cash. They keep their money in lockers, underground, nuts, etc. Countless times money has
been stolen, eaten by rats, or simply rotted over the years. However, modern banking systems
do not require the holding of cash at all. It actually helps to preserve much of the public
wealth that has been damaged in storage.

2. Availability of Cheap Loans

Before modern banks were established, people would borrow money from local money
lenders, landlords, merchants or other wealthy individuals. These loans were given at
exorbitant interest rates that most people couldn’t afford to pay, in the process the borrower
would always remain in debt. It was a vicious cycle. Modern banks started providing cheaper
loans to the underprivileged section of the society, breaking the whole expensive loans
system.

3. Propellant of Economy

Banks make money using a system called credit creation. By creating credit, banks can
borrow more money than they put in. When banks lend this money to agriculture, industry,
small businesses and service providers, it actually helps the economy grow exponentially.
This, in turn, creates jobs and purchasing power. In general, this single function of banks is so
powerful that the entire economy of any country depends on it.

4. Economies of Large Scale

An extremely important benefit of any bank is its deep and wide reach through the branch
banking system and the benefits of large scale operations. The wider the bank can reach the
better services it can provide. Now a day’s banks provide services of net banking, card
payments, ATM’s, etc. at even the most far-fetched and backward areas. Due to these large
scale operations, the services have become extremely cheap, or sometimes even free.

5. Global Reach
28
Many banks operate on a multinational scale, helping people and businesses in ways that were
not possible before the advent of modern banks. Multinational banks support money transfers,
exchanges from one currency to another. Export subsidies through paper transfers and
payments. Lending to governments, institutions and other global organizations. The bank's
offerings are endless and it has helped turn the world into a global village.
(https://efinancemanagement.com/financial-management/advantages-and-disadvantages-of-
banks)

29
 Capital Structure
The best capital structure for a company is a much discussed issue. While you find yourself in
some arguments that others clearly perceive the capital structure through the valuation of
securities or the risk of investing in them, capital structures increasingly influence value and
risk. The best capital structure, which is continuously developed, and successful businessmen
must constantly consider the state to take into account factors such as the company and its
management, the economy, state regulations and social trends, capital markets and the
dynamics of the industry. (Bhatt, V & Mehta, B, 2020) Any decision as to which external
approval is required for a capital increase or reduction will depend on market conditions and the
acceptance of investors' demands. (Banker, A, Jadhav, D, & & Bhatt, V)
The years preferred that debt financing were between the late 1970s and the 1980s. After
years when stock market values rose above the replacement cost of book values of assets,
rules and agreements for the first time in 15 years, late 1980s. It was a signal to the discharge.
Access to capital markets is no longer as difficult as it was ten years ago. The financing
scenario seems to be where it was at the beginning of 1975, the annual accounts began to
show signs of improvement, and companies began to acquire other companies with a strong
capital structure. While some companies increase their finances to the public markets, loans
with a certain income are used to pay short- term bank debts to your assets in order to
strengthen and restore the liquidity of banks. (HiralBorikar, M & Bhatt, V, 2020) Over the
past decade, many companies, financial institutions and governments have begun to focus on
foreign capital. Many of these companies would end up with little debt and greater flexibility
in the face of increased credit constraints. (Bhatt, H & R. D. V. A) In other words, the current
financial problems of such companies are being imposed. Instead of coping with both
recessions with sufficient liquidity and easy long-term debt. They had the capital structure
wrong for those periods.
So the question remains, what are the key factors that determine a company's financial
decisions? This question was important after the publication of the lectures by Modigliani and
Miller (1958, 1963).The researchers have studied various determinants of capital structure,
but they have not succeeded in developing a unified theory, which leaves the subject for
further research. (Sheth, J. D & Bhatt, V, 2019)

30
The financial structure of a company is represented by the left side (liabilities plus capital) of
the balance sheet. (Hiral Borikar, M., & Bhatt, V. 2020) Traditional short-term loans are
excluded from the list of types of financing for the company's investments, so long-term
receivables should form the company's capital structure. The capital structure is used to
represent the relative ratio of debt to capital. Capital includes paid-in share capital, capital
reserves and profit. (Nagvadia, M. J & Bhatt, V) The financing or capital structure decision is
an essential decision of the manager. It thus influences the return and risk of the shareholders;
the market value of the shares can be influenced by the decision on the capital structure. The
Company must plan its capital structure first and at the time of its support.

Factors Affecting Capital Structure

The main factors that relate to the capital structure are as follows:
 Leverage or Trading on Equity
 Expected cash flows
 Stability of earnings
 Control over the company
 Flexibility of the financial structure
 Cost of capital
 Financial Market conditions
 Types of Investors
 Statutory Provisions.

The word "capital" becomes the property of the company. Trading in share capital indicates
that the capital should be used on a reasonable basis for foreign capital. It refers to the
additional profits that the achievement of shares based on money through the issuance of
other forms of securities, is that preference shares and bonds. (Bhatt, H. R. D. V, 2020)
Leverage: The use of fixed costs of the fund such as preferred shares, bonds and forward rates
as well as the capital structure is referred to as leverage or trade finance. Equity Capital
trading is used due to increased debt. (Bhatt, V. G & Trivedi, T)
Debt Ratio - Financial institutions with simultaneous sanctions for long- term loans insist that
companies should typically have an interest rate which is not beyond the capacity of
repayment. The debt-equity ratio is the relative proportion of the investments of creditors and
shareholders. (Prajapati, K & Bhatt, V, 2019) The other factors that should be considered
while deciding the capital structure include Cost of capital, Cash flow forecasts of the
company, Size of the company, Dilution of control and Floatation costs. (Farana Kureshi, D.,

31
& Bhatt, V. 2018)

32
Features of an Optimal Capital Structure:
An optimal capital structure should have the following characteristics:

 Profitability: Use of business resources should be done at minimum cost to ensure

profitability.
 Flexibility: The capital structure should be flexible to cope with changing conditions. The
company should be able to raise funds when needed and to continue with certain costly
sources.
 Control: The capital structure should include minimal dilution of control over the company.
 Solvency: The use of excess debt threatens the solvency of the company. In an
environment of high interest rates, Indian companies are beginning to recognise the
merits of low debt.

Capital Structure and Firm Value

Since the goal of financial management is to maximise shareholders’ wealth, the key question
is: What is The Relationship between capital structure and enterprise value? What is the
relationship between capital structure and cost of capital. (Banker, A., Jadhav, D., & Bhatt, V.
2020) A certain level of income maximises the value of the company when the cost of capital
is minimised and vice versa. (Bhatt, V. G & & Trivedi, T) There are different views about the
value of structure affects as capital. Some argue that there is no relationship between capital
structure and enterprise value, others believe that financial leverage (i.e. the use of debt) has a
positive effect on the value of the enterprise. To some extent and thereafter; others claim that
other things sequential, greater leverage, increases value of the company. (Bhatt, V, 2018)

Capital Structure and Planning

The capital structure refers to the mix of long-term money sources. A company board member
or Chief Financial Officer should develop a capital structure which is ideal for the company.
(Bhatt, V & Joshi, D, 2019) This can only happen if all the factors for the capital structure are
adequately analysed. Structures in which capital is typically planned should have
shareholders' interests in mind. For a sound and appropriate capital structure, company should
take care of the have the following factors:

Returns:

The company should provide maximum returns to shareholders without additional cost to

33
them. Bhatt, V. (2021)

34
Risk:

Over-borrowings endanger the company's ability to pay for the use of over indebtedness.
Borrowed funds should be used to the extent that indebtedness does not pose a supply risk.
(Prajapati, K., & Bhatt, V. 2019)

Flexibility:

The capital structure should be flexible. On the one hand, the company takes over its capital
structure and its costs and delays if this is justified by a changed situation. An existing fund
company should be able to finance profitable business at any time. (Aggrawal, A. 2014)

Capacity:

The capital structure should be determined based on the debt capacity of the company and this
capacity should not be exceeded. The leverage of the company depends on its ability to
generate future cash flows. It would have sufficient cash flows from creditors, fixed fees and
capital amounts. (Shastri, S. (2018))

Control:

The capital structure should include a minimum deficit and the loss of control over the
enterprise. Dilution of control leads to far more complicated problems, more than lack of
funds can ever lead to. Ajmera, H., & Bhatt, V. (2020)

Capital structure ration

Structural or debt ratios are used to analyse the long-term solvency or stability of a particular
business area. Short-term lenders are interested in the current financial situation and the use of
liquidity ratios. (Bhatt, V. G & Trivedi, T. M) The world of long-term lenders determines
company’s soundness based on its long-term financial strength to pay interest on a regular
basis and to repay the interest rate on the due date as measured by its ability. This long-term
solvency can be assessed through the use of foreign capital or structural conditions. (Bhatt, H.
R. D. V. 2020)

There are two aspects of the long-term solvency of a company: -.

1. Ability to repay of the principal payable

2. Regular payment of interest

35
Performance appraisal and prediction of future performance are the primary addressees of the
financial statements, and these two are simpler in comparison. Therefore, financial analysis
always focuses on the critical information contained in the financial statements. This depends
on the objectives and purpose of the analysis. (Bhatt, H. R. D. V) The purpose of valuing such
a balance sheet / income statement is another form of person- to-person, depending on their
relationship. In other words, even if the company itself and the shareholders, bondholders,
investors, etc., everything under the financial analysis is different. (Bhatt, B. B. C. D. V)

For example, trading creditors may be particularly interested in a company's liquidity because
their receivables are best assessed by playing through the ability of the liquidity business area
analysis. Shareholders and potential investors may be interested in the current and future
earnings per share, the stability of this result and the comparison of this turnover with other
units in the industry. (Raval, H. P., & Bhatt, V. 2021) The bondholders and financial
institutions concerned long-term loans, possibly loans with cash flow capability of the
business unit, to repay the debt over the long term. However, the management of the business
unit sees it from different angles in the financial statements. (Malek, M. S., Bhatt, V., & Patel,
A. 2020)

Making, but also internal control and the overall performance of the company. Therefore, the
scope varies according to the specific requirements of the analyst scope and the means of
financial analysis. (Raval, H. P., & Bhatt, V. 2021) The analysis of the balance sheet / income
statement is part of the larger information processing system and forms the basis for each
"decision making" process”.

Capital adequacy ratio (BASEL – II)

The Capital Adequacy Ratio (CAR) is also referred to as the Capital to Risk Weighted Assets
Ratio (CRAR). It is an international standard that measures the insolvency risk of a bank due
to excessive losses. Maintaining an acceptable CAR protects bank depositors and the financial
system as a whole.

Capital adequacy ratio (Tier – I)

The Capital Adequacy Ratio (CAR) is a measure of a bank's available capital expressed as a
percentage of a bank's risk-weighted credit exposure. The equity ratio, also known as the
Capital-to-Risk Weighted Assets Ratio (CRAR), serves to protect depositors and promote the
stability and efficiency of financial systems worldwide. Two types of capital are measured:
Tier 1 capital, which can absorb losses without a bank having to stop trading, and Tier 2
36
capital, which can absorb losses in the event of liquidation and thus provide less
protection to

37
depositors.

Capital is divided into two types to measure the Bank's capital base. Core capital [(paid-in
capital + legal reserves + disclosed free reserves) - (holdings in subsidiaries + intangible
assets
+ current and past losses)], which can absorb losses without a bank having to stop trading.
The measurement of credit exposures requires adjustments to be made to the assets shown in a
bank's balance sheet. The loans granted by a bank are weighted broadly according to their
degree of risk, e.g. loans to governments are weighted at 0 per cent, while loans to individuals
are weighted at 100 per cent. The formula for calculating CAR (Tier - I) is as below.

As per international standards tier one capital to total risk weighted creditxposures to be not
less than 4 percent

Capital adequacy ratio (Tier – II)

Tier 2 capital is, alongside Tier 1 capital, the secondary component of bank capital, which
constitutes a bank's required reserves. Tier 2 capital is referred to as supplementary capital
and consists of items such as revaluation reserves, hidden reserves, hybrid instruments and
subordinated term loans. In calculating a bank's reserve requirement, core capital is
considered less secure than core capital, and in the United States the bank's total capital
requirement is partly based on the weighted risk of a bank's assets.

Tier 2 capital [(A) Hidden reserves + B) General loss reserves + C) Hybrid debt instruments
and subordinated liabilities], which can offset losses in the event of liquidation and thus
provide less protection to depositors. The formula for calculate CAR (Tier - II) is as below.

As per international standard total capital (tier one plus tier two less certain deductions) to
total risk weighted credit exposures to be not less than 8 percent.

38
Debt coverage parameters

In corporate financing, the Debt Service Coverage Ratio (DSCR) is a measure of the cash
flow available to settle short-term debt. The ratio shows the net operating result as a multiple
of the liabilities due within one year, including interest, principal, sinking fund and lease
payments. In public finance, it is the amount of export earnings needed to cover the annual
interest and principal payments on a country's foreign debt. In personal finance, it is an
indicator used by bank loan officers to determine income real estate loans. In any case, the
ratio reflects the ability to service debt at a certain income level.

The debt coverage parameters focus on the bank's ability to meet its customers' demand for
cash. Debt coverage parameters are also considered liquidity parameters. It is very important
that every financial system has sufficient liquidity in the economy. Banks must play a crucial
role in maintaining this.

Credit to deposit
The credit deposit ratio, popularly called the CD ratio, is the ratio of how much a bank
borrows from the deposits it has mobilized. The RBI does not prescribe a minimum or
maximum quota, but a very low quota indicates that banks are not fully using their resources.
Alternatively, a high ratio indicates a higher dependency on deposits for loans and a likely
pressure on resources. The CD coefficient helps to assess a bank's liquidity and indicates its
health - if the ratio is too low, banks may not earn as much as they could. If the ratio is too
high, it means that banks may not have enough liquidity to meet an unforeseen fund
requirement, leading to capital adequacy and an asset-liability mismatch. A very high
proportion could have an impact at the systemic level.

It is the ratio of how much a bank borrows from the deposits it has mobilized. It indicates how
much of a bank's core funds is used for lending, the most important banking activity. A higher
proportion indicates greater dependence on deposits for loans and vice versa. [63] This ratio
expresses the total advance as a percentage of the total deposit. The formula for calculating
the credit to deposit ratio is as follows.

Total Advances includes bills purchased & discounted (short term), cash credits, overdrafts &
loans (short term) and term loans.

39
Investment to deposit
The total investment comprises all investments made by the Bank during the financial year,
including all long-term and short-term investments such as loans, advances, investments in
the stock exchange, etc. The total investment includes all investments made by the Bank
during the financial year.
The deposit ratio refers to the deposits taken by the Bank from the savings account, current
account, recurring deposit account and fixed account. But all these are income from the bank,
which earns interest for the bank and for the person who deposited the same at the bank, and
once again this money is invested in sources of income such as the stock market, bonds, etc.
If it is a total investment to total returns, then you get the returns from the profit and loss
account, as you said you have the balance sheet for it and deduct the taxes and interest from it
to get the original returns for the investments. Then take the sum of the two investments, as I
indicated in the answer earlier, and divide both to get the desired result.

This ratio indicates the total investment as percentage of total deposit.

The formula to calculate investment to deposit ratio is as under.

Ratio of deposit to total liabilities

This ratio indicates the total deposit as percentage of total liabilities.

The formula to calculate ratio of deposit to total liabilities is as under.

Total liabilities include capital, reserves & surplus, deposits, borrowings, and other liabilities
& provisions.

Ratio of demand & saving bank deposit to total deposit

This ratio indicates the demand and saving bank deposit as percentage of total deposits. The
formula to calculate ratio of demand & saving bank deposits to total deposit is as under.

40
Balance sheet parameters

This parameter set helps the analyst assess the strength of banks' balance sheets. Balance sheet
strength not only in terms of its assets and liabilities, but also in terms of compliance with the
RBI Directive in terms of priority sector advances, secured advances, long-term loans,
investments, etc.

Ratio of priority sector advance to total advance

In order to strengthen the priority sector, RBI has adopted certain rules and regulations for
banks. Under the RBI Directive, it is binding on all commercial banks. The formula for
calculating the ratio of the priority sector approach to the total approach is as follows.

Priority sector advance include advance given to agriculture, micro, small and medium
enterprises, export credit, education, housing, social infrastructure and renewable Energy
sector.

Ratio of secured advance to total advances

This parameter specifies the secured advance as a percentage of the total advances. A higher
percentage of this ratio indicates a higher weight age of the safe progress in the total advance.
The formula for calculating the secure advance to total advance ratio is as follows.

Ratio of term loan to total advance

This parameter indicates the amount of term loan as percentage of total advance. Term loan is
considered as one part of total advance.

41
Ratio of investment in non-approved securities to total investment

This parameter indicates the investment in unlisted securities as a percentage of the total
investment. The formula for calculating the ratio of investments in unauthorized securities to
total investment is as follows.

Management efficiency parameters

These set of ratios evaluate the management’s ability to utilize their assets for generating
revenue in form of interest income, non-interest income and operating profit.

Ratio of interest income to total assets

The ratio of interest income to total assets indicates interest income as a percentage of total
assets. It is also referred to as the net interest margin. The formula for calculating the ratio of
interest income to the balance sheet total is as follows

Total Assets includes cash in hand, balances with RBI, balances with banks inside/outside.
India, money at call, investments, advances, fixed Assets and other Assets.

Ratio of non-interest income to total assets

The ratio of non-interest income to total assets indicates non-interest income as percentage of
total assets. It is also known as non-interest income margin. The formula to calculate ratio of
non-interest income to total assets is as under.

42
Ratio of operating profit to total assets
The ratio of operating profit to balance sheet total indicates the operating profit as a
percentage of the balance sheet total. The operating result is the surplus of interest income
over operating costs. The formula for calculating the ratio of operating profit to balance sheet
total is as follows.

Profitability parameters
This parameter set is used to measure the profitability of banks. There is a big difference
between the term "profit" and "profitability".

That deals with numbers, while profitability is a term that correlates profit with other terms
such as wealth, equity, advance, investment, etc., allowing meaningful conclusions to be
drawn.

Cost of deposit to total deposit

The cost of deposit ratio indicates the costs incurred by the banks for investment interest. As
such, there is not much difference between the different banks in this ratio, as there is almost
the same deposit rate in all banks. The difference in this ratio between banks may be due to
the volume of business that each bank has. The formula for calculating the cost of the deposit
ratio is as follows.

Cost of borrowing to total borrowing

The cost of debt ratio indicates the costs incurred by the banks in taking out loans. Many
times banks have to depend on the borrowing fund for meeting the cash requirement. The
ratio to the calculation of borrowing costs is as follows.

Total borrowing includes secured borrowings (In India and Outside India) and unsecured
borrowings (In India and Outside India).

43
Cost of fund to total fund

Ratio of cost of fund indicates the total cost the firm has incurred for collecting fund either
from way of deposit or from borrowing. The formula to calculate cost of fund is as under.

For calculation of this parameter total fund includes both borrowing and deposit collected.

Return on investment

The return indicates the profit in relation to the total investment. It shows the investment
efficiency of banks. The formula for calculating the return on investment is as follows.

Non-performing assets parameters

The NPA is the main parameter for assessing the financial performance of a bank. Today,
almost all banks face the problem of a high NPA one day. A high NPA is considered a very
important signal for the financial performance of all banks. NPA can be measured using the
gross NPA as a percentage of the gross advance, the gross NPA as a percentage of assets, the
net NPA as a percentage of the net advance, the net NPA as a percentage of assets.

Gross NPA as percentage of gross advance

This parameter indicates the gross NPA as percentage of gross advance of any banks. Lower
the ratio indicates the good performance of banks.

Gross NPA as percentage of assets

This parameter indicates the gross NPA as percentage of assets of any banks. Lower the ratio
indicates the good performance of banks.

Net NPA as percentage of assets

44
This parameter indicates the net NPA as percentage of assets of any banks.

Lower the ratio indicates the good performance of banks.

These ratios help in assessment of Banks’ over all position. (Baxi & Bhatt, 2019)

45
 Need of the study

The study aims to identify the different determinants of capital structure in the banking sector
and also to determine the impact of changes in the bank's capital structure on its performance
over time. Therefore, it is very important to have a clear idea of these factors and costs of
different sources in the banking sector.

Importance of the study

The focus of this study is on impact of capital structure on the profitability of private sector
banks. Here we are conducting a survey to analyse the profitability of private sector banks.
The main purpose of this study is to analyse the various aspects that affect the profitability of
banks.

It will lead to a higher valuation in the market. A good capital structure ensures that the
available funds are used effectively. It prevents over or under capitalisation. It helps the bank
in increasing its profits in the form of higher returns to stakeholders.

Identification of problem

1. How much should be raised by issuing preference shares?

2. How much should be raised by bonds and other long-term debt?

3. How much should be raised through the issuance of equity?

Research Questions

Research question is trying to understand the Impact of capital structure on the probability of
public and privet sector banks in India.

46
 Chapter-2
Review of Literature

47
Capital structure is one of the most important areas of financial decision making. This study
was conducted to examine the effect of capital structure on the profitability of public and
private sector banks in India listed on the National Stock Exchange from 2013 to 2017.
Regression and correlation analyzes were used. In this study collected secondary data from
website: www.moneycontrol.com and source: Dion Global Solutions Limited for the top 10
public and private banks. From this it can be concluded that on average commercial banks
have more capital than private banks. We also conclude that there is a negative relationship
between capital structure and profitability. (Y. Vijayalakshmi, N.Chandan Babu, & Pranay
Kumar, 2019)

This study aims to determine the determinants of capital structure and its effect on financial
performance. They used secondary data and selected 50 leading manufacturing companies for
their research. Regression model is used to study the relationship and effect of capital
structure on profitability. The study concludes that there is a significant relationship between
capital structure and profitability and that capital structure has a significant effect on the
financial performance of the sample companies. (Prasad Das & Swain, 2018)

The aim of this study is to analyze the determinants of capital structure in both public and
private commercial banks in Ethiopia. To find out what defines capital structure, eight
explanatory variables were selected and regressed to the appropriate size of capital structure.
A sample of eight private commercial banks and one public bank were used for analysis, and
a mixed research approach was adopted for this study. As a result, a multivariate regression
analysis using a fixed effects model was applied to the financial data during the 2006-2015
study. The main results of the study show that six explanatory variables (profitability, size,
age, tax shield, growth and inflation) for commercial banks and six explanatory variables
(profitability, size, age, tax protection, GDP and inflation) are important determinants of
capital structure for banks. (Kanth Makarla, 2019)

This study examines the impact of capital structure on profitability of core operations of
commercial banks in Ethiopia. To achieve the objectives of this study, a quantitative panel
data methodology was used. The data comes from the audited financial statements of the
Commercial Bank of Ethiopia, National Bank of Ethiopia for a period of 5 years (2009 -
2013). The model used to estimate the fixed effect of the data was applied to the data analysis
with the SPSS statistical package. It should be noted that 94% of the total capital of Ethiopian
commercial banks consisted of debt during the period under consideration. 75% are deposits
and the rest are non-deposit liabilities. ( Gebrehiwot Gebremichael & Ethiopia, 2016)

48
This paper attempts to identify the determinants of capital structure in a sample of commercial
banks listed on the Gulf Cooperation Council (GCC) stock market. To achieve this goal, data
from 47 commercial banks were collected from the GCC for the period 2001-2010. We find
that profitability and liquidity influence bank capital structure decisions. The main
contribution of this study is that most of the assets of commercial banks in the GCC are
funded by debt, which accounts for more than 80 percent of the bank's capital. The main
results show a negative and statistically significant relationship between the capital structure
of GCC banks and their ROA, which is represented by ROA, tangibility and size. There is a
positive and statistically significant relationship between the capital structure and the growth
and age of GCC Bank. (AL-Mutairi, 2015)

This article analyzes the impact of capital structure on the financial performance of banks in
India. The survey covers a five-year period from 2011 to 2015 and 21 banks were selected for
the survey. This study aims to examine the effect of capital structure on bank financial
performance and analyze the relationship between financial leverage and bank financial
performance. Regression analysis was conducted to examine the effect of capital structure on
profitability, taking into account the capital structure as independent variable and profitability
as dependent variable. The results showed that the capital structure has a significant influence
on the financial performance of banks in India. (Pinto, Thonse Hawaldar, & Maria Quadras,
2017)

This paper aims to examine the impact of capital structure on the profitability of public sector
banks in India that are listed on the national stock exchange from 2008 to 2012. The
methodology - regression analysis - is used to compare the relationship between return on
equity, return on investment and EPS with the results of structure capital - The results showed
a positive relationship between short-term debt and profitability as measured by ROE, ROA
& EPS. This paper attempts to examine the impact of liquidity management on the
profitability of public and private sector banks in India. For this purpose, 27 commercial
banks and 20 private banks were examined for the period 2011-12 and 2015-16. (A.M. Goyal,
2020)

Cash Deposit Ratio (CDR), Loan-to-Deposit Ratio (CRDR) and Investment-to-Deposit Ratio
(IDR) are used as independent variables to indicate bank liquidity management, while return
on assets (ROA) and Return on Equity (ROE).it has been used as a proxy for bank
profitability. CDR and IDR proved to have a significant negative effect on ROA. However, in
the case of ROE, it is found that there is no significant relationship between bank profitability

49
and liquidity when considering all variables, regardless of the type or form of commercial
bank in India. This

50
shows that commercial banks can focus on increasing profitability without sacrificing
liquidity. ( Mehrotra, 2019)

This article aims to understand the impact of profitability on the capital structure of the
banking sector and provide further input on this matter. For this purpose, five public and five
private banks by market capitalization were used. Data was collected from the period 2015-16
to 2019- 2020. The technique used is descriptive statistics, correlation and panel data
methodology. We conclude that capital structure (equity) has a complete impact on bank
productivity (ROA). The results of the correlation analysis show that the two capital structure
ratios viz. Both equity and TLTA have a negative impact on ROA and EPS returns. (Pal
Singh, Bhardwaj, Garg, & Jain , 2021)

This study aims to determine the effect of capital structure on the profitability of banks listed
on the Johannesburg Stock Exchange (JSX) using a random regression model. Empirical
studies examining the impact of capital structure on the profitability of the banking sector in
emerging markets and Africa are scarce. This study examines how the profitability of South
African banks is influenced by their capital structure. This study finds that capital structure is
a major determinant of bank profitability in South Africa. Therefore, this study recommends
an optimal capital policy if banks not only want to increase profitability, but also ensure long-
term stability and stable performance. ( Maduane & Tsaurai, 2016)

This study examines the effect of capital structure on the banking performance of 6 Iraqi
private banks between 2005 and 2015. There is no denying that capital structure decisions are
an important factor for successful banks in Iraq. Variables identified as independent of capital
structure are total debt capital, bank size and asset growth, while return on capital and return
on equity are considered dependent variables on bank performance. An interesting and
valuable finding of this study is that TDC has a statistically significant positive effect on
ROE, while the other independent variables do not. ( SH. Ibrahim, 2019)

From 2006-07 to 2012-13, we empirically tested the impact of ownership and size change on
diversification and other banking performance metrics for 46 public and private sector banks
in India. These banks account for more than 90 percent of the activities of ordinary
commercial banks. We find a negative relationship between asset inefficient (NPA) and return
on investment (ROA). In addition, diversification has shown a positive relationship with
investment returns over the past two years. ( Bapat & Sagar, 2016)

51
This study aims to analyze the effect of LDR on bank profitability and the variables that can
inhibit the effect of LDR on ROA, as well as obtain empirical evidence about it. The subjects
of this study were banks listed on the Indonesia Stock Exchange for the period 2013 to 2016.
25 banks were selected using the targeting sampling method. The research subjects were
divided into two categories, namely BUKU 1 and BUKU 2 banks and BUKU 3 and BUKU 4
banks. The results showed that BUKU 1 and BUKU 2 banks were influenced by LDR and BI
interest rates. ( Akbar, 2019)

In this research article, the researcher analyzes the capital structure of two banks based on
their convenience. Researchers took two banks namely. ICICI and SBI compare their debt and
equity. By using the average and percentage technique, the researcher concludes the
collection of funds from these banks. The cost of capital for SBIs decreases every year and the
cost of capital for ICICIs increases. The basis of the research concludes that ICICI is better
than SBI because it continues to aim to lower the cost of capital compared to SBI. (Phor,
2014)

Currently, bank managers are more focused on the capital structure to achieve optimal
allocation of finance costs in banks. Surgery to increase its effectiveness. Using a database of
28 Vietnamese commercial banks during the 2010-2019 period, this paper examines the
impact of capital structure on bank performance. In light of these results, several implications
are suggested for policy makers and bank managers to improve bank performance and further
enhance the stability of Vietnam's banking system, especially under the current uncertain
economic conditions. ( Nguyen, Nguyen, Dinh, & Vu, 2021)

This study was conducted to measure and compare the performance of 32 Indian banks, 21
public banks and 11 private banks at two levels during the period 2008 to 2018. Industry
analysis of the public and private banking sectors was carried out at the first level, followed
by individual analysis at the bank level at the first level. Data analysis consists of deposits,
assets and equity as inputs to measure the results by applying the Data Envelope Analysis
technique. With earnings and deposits improving in both types of banking, there is still room
for commercial banks to realign their short and long term marketing and communications
strategies to focus on customer reach and industry-level managerial capabilities. ( Ahmad &
Khan, 2021)

Bank performance is directly influenced by these factors. An attempt was made to study bank
performance based on various parameters such as capital adequacy, asset quality,
management efficiency, profitability and liquidity - the CAMEL model. A comparative study
52
of State Bank of India and HDFC Bank was conducted using the CAMEL model. The results
show that HDFC Bank has outperformed State Bank of India in terms of capital adequacy,
asset quality and

53
governance, while State Bank of India has outperformed HDFC Bank in terms of liquidity. In
terms of earnings quality, both banks have the same score. ( Pandit & Gandhi, 2021)

This study attempts to measure the financial health and performance of public sector banks by
ranking them. It covers India's 21 public sector banks for a ten year period, i.e. 2008-2009 to
2018-2019. This survey is based on secondary data from the capital database and the annual
financial statements of each bank. The CAMEL model is used to measure bank efficiency.
The results of the analysis show that India's public sector banks are working to maintain
adequate capital and that all banks should strive to achieve more than necessary in the coming
years. ( Singhal & Gupta, 2020)

This paper examines the determinants of risk appetite in European banks during the major
financial crisis. Using a sample of banks from 26 countries from the period 2005-2015, they
examine the nature of the relationship between bank risk, bank characteristics and regulatory,
institutional and macroeconomic variables. Researchers use a dynamic panel data modelling
structure to capture potential inconsistencies in risk behaviour. They divided their sample into
two subsamples. They show that macroeconomic and regulatory variables appear to have a
negligible impact on banks' risk appetite. They document that the relationship between bank
risk and internal and external factors differs in different samples. ( Jabra, Mighr, & Mansouri,
2017)

This study aims to analyze and explain the determinants of the company's capital structure.
The research subjects are companies from the banking sector listed on the Indonesia Stock
Exchange for the period 2012 to 2014. Capital structure (CS) is measured by the leverage
ratio (DER). Dividend payments are calculated from the dividend yield. Firm size is measured
by the natural logarithm of total assets. Data analysis was performed using a structural
equation model (SEM) with Smart PLS 3.0. The results show that firm size has a negligible
effect on dividend payments, but has a significant negative effect on capital structure. (
Fauziah & Iskandar, 2015)

They argue that banking efficiency creates incentives that can affect bank capital and financial
intermediation costs. Analyzing a panel data set of 1,190 BRICS banks (Brazil, Russia, India,
China, South Africa) between 2007 and 2015, they find strong evidence that more efficient
banks have higher capital and charge lower financial intermediation costs. In an expanded
sample covering the period 2000-2015, they observe that cost efficiency had a negligible
positive impact on bank capital during the 2007-2009 global financial crisis. (Rahman,
Ashraf, Zheng, & Begum, 2017)
54
This paper is an attempt to examine the comparative analysis of the capital structure and its
impact on the profitability of PNB & HDFC Banks and whether the bank has an effective
capital mix and the impact of changes in capital structure from time to time on the
performance for the analysis of the bank. The research data refers to 2014 and 2015. The basis
of the research concludes that HDFC is better than PNB because it still aims to reduce
borrowing costs compared to PNB. ( Kaur, 2016)

There is a relative paucity of empirical research examining the relationship between capital
structure and bank performance in Bangladesh. This study attempts to fill that gap. Using
panel data from 22 banks during the period 2005-2014, this study empirically examines the
effect of capital structure on bank performance in Bangladesh as measured by return on
equity, return on assets and earnings per share. The results of the generalized simple least
squares analysis show that the capital structure has the opposite effect on bank yields.
( Siddik, Kabiraj, & Joghee, 2017)

This article examines the impact of monetary policy on the capital structure of commercial
banks in order to understand the transmission mechanism through bank capital channels. They
use panel data from 36 banks, including 21 public sector banks and 15 private sector banks.
The analysis period is 2004-05 to 2016-17. Monetary policy shocks have been observed to
have a significant impact on Tier 1 banks' capital through their choice of interest rate spreads
and ports. The analysis shows that bank capital is an important channel for studying the
transmission mechanisms of the Indian economy. ( Bhatia, 2019)

The purpose of this study was to examine the effect of financial leverage on the financial
performance of small banks in India. Return on assets and return on equity are the dependent
variables in this study. The independent variables in this study are leverage, leverage, interest
coverage ratio, and cash coverage ratio. A sample of six small financial banks was used from
2017 to 2021. Secondary data is the type of information used. Targeted sampling was used for
data collection. The model to analyze the regression data on the panel was used. Thus, the
level of debt has a positive effect on returns on assets and returns on equity. The debt to
equity ratio has a positive effect on asset returns, but has a significant positive effect on stock
returns. ( Rajesh, .Nanthini.M, P.Sivaranjani, P.Prakash, & S.Gokulanathan, 2021)

55
 Research Gap

Apart from the 25 literature reviews mentioned above, there are enormous numbers of
research which have analysed financial performance of different sector of banks time to time
with suitable parameters as per the objectives that they have stated in their research work. In
this research, only private sector banks were considered for the evaluation and identification
of factors responsible for the different financial performance. In this study we used panel data
for the period of 5 years and 5 private banks operating in the country.

56
 Research data &Samples

All private sector banks operating in India are the population of the study. The sample of the
study includes banks listed on the national stock exchange and the Bombay Stock Exchange
from 2017 to 2021. The data for the study are collected from the audited financial statements
of listed banks, the website of the National Stock Exchange, Bombay Stock Exchange and the
Reserve Bank of India.

Independent Variables:

Independent variables are the variables that the experimenter changes to test his dependent
variable. Changing the independent variable leads directly to a change in the dependent
variable. The effect on the dependent variable is measured and recorded.

Here Independent variables consist of Firm Size, short term debt to capital, Asset Growth and
long term debt to capital

1. Firm Size

According to Titman and Twite (2003) firm size is calculated as natural log of total book
value of assets. In this study we will use the book value of the total assets to calculate the firm
size (SIZE). Firm size= in (book value of total assets)

2. Short term debt to capital

Short-term Debt to capital ratio (STDTC) is measured by dividing shor tterm debt with total
capital.

3. Asset Growth

Assets Growth is used by many scholars in their studies and for the purpose of this research; it
is calculated by the following formula. Assets Growth= (assets of current year-assets of
previous year)/assets of current year

4. Long term debt to capital

Here in case of Banks, all borrowings other than Deposits are considered as long term debt.

Dependent Variables:

57
The independent and dependent variables may be viewed in terms of cause and effect. If the
independent variable is changed, then an effect is seen in the dependent variable. The value of
the independent variable is controlled by the experimenter, while the value of the dependent
variable only changes in response to the independent variable. Here the Dependent Variables
are Earnings per share (EPS), Return on Assets (ROA) and Return on equity (ROE).

5. Earnings per share

Earnings per share are generally considered to be the most important single measure for
determining the share price. It is also an important component in calculating the valuation
ratio between price and earnings. Earnings per share=net earnings/number of shares

6. Return on Assets

The Return on Assets (ROA) financial metric is a profitability metric that analyses
management's ability to generate an appropriate return on the money invested in a company's
assets. Only two variables are required to determine return on assets: net income and total
assets. Return on Assets (ROA) measures the profitability of the firms and is calculated as:
Return on assets=operating income/total assets

7. Return on Equity

Return on equity (ROE) is a measure of a company's financial performance that represents the
relationship between a company's profit and the investor's return. Return on Equity (ROE) is
used to calculate a firm’s profitability by revealing how much profit a firm generates with
money invested by shareholders and its formula is given below: Return on equity=net profit
attributed to shareholders/total shareholders’ equity

Statistical tools & Testing of Regression Models:

Here in this research work below mentioned statistical tools were used to analyse the data.

1. Median

To identify the value of median elements in the data set, it must be arranged in ascending
order. According to the arrangement of the elements, if the total number of elements is odd,
the value of the elements is in the middle of the median and if the total number of elements is
even, the average of the values of two central elements is if the median.

2. Mode

58
The item or the value of the item which repeated the most is Mode for the data set.

3. Arithmetic mean

Arithmetic Mean is one of the most widespread measures of the central trend, which here
contributes to averaging financial performance over the selected years and also across the
different sectors, providing a basis for the use of other statistical tools. The arithmetic mean is
the average of various financial performance indicators of public and private sector banks.
Here, the researcher focuses on the term of office from 2011 to 2018, so averages of all
factors are considered as averages for certain variables. This average can be seen as one of the
most important instruments of the central trend and is widely used for comparative studies.
This study refers to public and private sector banks, so this statistical tool is very important.

4. Skewness

The skewness shows the form of the distribution of the data set. If the mean, median, and
mode of a data set are the same, then there is no skewness in the data set and the data is
normally distributed. The difference between the mean, median, and mode of the data set
shows the skewness in the distribution of the data set. Kurtosis

5. Kurtosis

Shows the shape of the peak (flatness or sharpness) of the distribution curve for a data set.

6. Standard Deviation

The standard deviation is the most important tool to understand deviations in the data. In any
research, the sanctity of the data is very important and helps the researcher to understand
differences or variations in the data. Usually, fluctuations are directly related to the risk
elements. The standard deviation is the average deviation from the value of the arithmetic
mean. In comparative studies it is important to understand the consistency level of the data,
therefore the ratio of standard deviation and mean is used to understand consistency and
compares much better than any other statistical tool.

7. One way Anova for difference in two mean

One way Anova is one of the most effective and robust infraction tools of modern research.
With this tool, the researcher can understand the differences in resources for more than two
categories for each specific continuous variable. Here the researcher has applied this tool to
evaluate the difference between different types of banks in relation to different performance

59
indicators of public and private banks. The researcher has also tried to compare the
performance of different types of public and private sector banks, newly established banks in
terms of capital adequacy ratio, the ratio of cash to deposits, the ratio of credit to deposits, the
ratio of investments to deposits, the ratio of deposits to total liabilities, the ratio of demand
and savings deposits to total deposits, the ratio of advance to total advance, the ratio of
secured advance to total advance, the ratio of term loan to total advance, the ratio of
investments in unauthorized securities to total investments and the ratio of interest income to
total assets.

8. Measures of Relationship

a.) Co-variance: The covariance is the expected value of the product of the deviations
from the mean of the two items estimated by adding the products from the deviations
from the mean for the corresponding values of the two items divided by the number of
items. It shows how much two elements are different together.

b.) Correlation: The correlation shows the relationship between two or more variables
having cause and effect relationship. With positive correlation, the changes in the
variables are in the same direction and with negative correlation in the opposite
direction.

9. Anova F test for difference in more than two mean

Whenever the researcher wants to know the difference between more than two mean values of
normally distributed data, the Anova F test is used.

In this research work Anova F test used to know the difference in the middle of the financial
performance of each parameter within the sector between banks and also used to know the
difference in the middle of the financial performance of each parameter between sectors.

10. Multiple Regression Model

Multiple Regression shows the statistical relationship between the dependent variable and
several independent variables. There is a mathematical model to find the value of the impact
arising from the change in variables to the value of the dependent variable.

• The multiple regression model with two or more independent variables is the simplest
multiple regression model where the highest performance of a variable is equal to one.

• In multiple regression analysis, sample regression factors are used to estimate population
parameters.
60
11. Model Specification

61
Multiple regression models are used to find out the association between capital structure
characteristics and banks performance in the context of India. Three regression models are
formulated to check the relationship between capital structure and banking performance. Our
base models take the following form:

Y it = α + βXit + μit

Where: Yit is the dependent variable. β0 is the intercept.

Xit is the independent variable.

μit are the error terms. i is the number of firms and

t is the number of time periods.

12. Determination of Coefficient of Multiple (R2)

R square measures the proportion of variation in dependent variable “y” that can be attributed
to the combination of Independent variables X.

13. Residual Analysis of multiple regression model

Regression line expresses the best prediction of the dependent variable (Y), given the
independent variables (X). However, nature is rarely (if ever) perfectly predictable, and
usually there is substantial variation of the observed points around the fitted regression. The
deviation of a particular point from the regression line (its predicted value) is called the
residual value. Residual analysis is mainly used to test the assumptions of Regression model.
(Baxi & Bhatt, 2019)

Four Assumptions of regression analysis are as follows:

 Linearity of regression model

 Constant error variance
 Independence error
 Normality of Error

14. Research hypothesis:

First level comparison for financial performance:

 There is no significance difference in the financial performance of different nationalized

banks and its associate banks within sector.

62
  There is no significance difference in the financial performance of different nationalized
banks and its associate banks within sector.
 There is no significance difference in the financial performance of different new private
sector banks within sector.
 There is no significance difference in the financial performance of different new private
sector banks within sector.

15. Data Analysis Tools

To analyse the primary data collected through questionnaire two most commonly used data
analysis tools were used.

• SPSS

• Microsoft Excel

63
 Chapter-3
Research Methodology

64
 Research objectives

1. To compare the performance of private sector banks with respect to various factors
affecting the capital structure.
2. To evaluate the relationships amongst the various factors of capital structures of private
sectors banks.
3. To identify the factors responsible for better/poor financial performance of private sector
banks.
4. To understand the level of various factors of capital structures like – Return on Equity,
Return on Asset, Earnings per share, Asset Growth, Firm Size, Long term debt to capital,
Short term debt to capital.

65
 Research Design

In order to examine the impact of the performance of private sector banks, this study proposes
to use the methods applied in previous research on this subject. Since other studies have
discussed these relationships, the conceptual framework of our study is based on the
deduction method.

The analysis of the data collected from secondary sources was carried out using quantitative
techniques. The analysis of the data is proposed by descriptive statistics, correlation matrix
and regression models.

The multiple regression model is used to find a link between capital structure characteristics
and its impact of banking performance in the context of private banks in India.

To quantify the financial performance of banks, various financial ratios of banks were used,
which were already discussed in detail in the previous chapter. In order to better understand
the financial performance, all selected financial ratios were subdivided into seven sub-
headings:

 Balance parameter
 Management Efficiency Indicators
 Profitability parameters
 Employee efficiency parameters
 Parameters for non-performing assets
 Equity ratio (BASEL - II)
 Parameters of debt coverage

66
Chapter – 4
Data Analysis

67
 Correlations

Return on Equity and Earnings per share

Return on Equity Earnings

per
share
Pearson Correlation 1 .785**
Return on Equity Sig. (2-tailed) .000
N 25 25
Pearson Correlation .785** 1
Earnings per share Sig. (2-tailed) .000
N 25 25

H0= there is no significant relation between ROE and EPS

H1= there is significant relation between ROE and EPS

Here in table value of correlation coefficient is 0.785 which indicates that there is a positive
correlation between two variables and significant value is 0.000 which is less than 0.05. This
means that null hypothesis is to be rejected which says there is significant relationship
between Return on Equity and Earnings per share.

Return on equity and Return on Assets

Return on Equity Return on Assets

Pearson Correlation 1 .918**

Return on Equity Sig. (2-tailed) .000
N 25 25
Pearson Correlation .918** 1
Return on Assets Sig. (2-tailed) .000
N 25 25

H0= there is no significant relation between return on equity and return on assets in
percentage H1= there is significant relation between return on equity and return on assets in
percentage
68
Here in table value of correlation coefficient is 0.918 which indicates that there is a strong
positive correlation between two variables and significant value is 0.000 which is less than
0.05. This means that null hypothesis is to be rejected which says there is significant
relationship between return on equity and return on assets.

Earnings per share and Return on Assets

Earnings per share Return on Assets

Pearson Correlation 1 .773**

Earnings per share Sig. (2-tailed) .000
N 25 25
Pearson Correlation .773** 1
Return on Assets Sig. (2-tailed) .000
N 25 25

H0= there is no significant relation between ROA and EPS

H1= there is significant relation between ROA and EPS

Here in table value of correlation coefficient is 0.773 which indicates that there is a positive
correlation between two variables and significant value is 0.000 which is less than 0.05. This
means that null hypothesis is to be rejected which says there is significant relationship
between Earnings per share and Return on assets.

Firm Size and Asset Growth

Firm Size Asset Growth

Pearson Correlation 1 .021
Firm Size Sig. (2-tailed) .921
N 25 25
Pearson Correlation .021 1
Asset Growth Sig. (2-tailed) .921
N 25 25

69
H0= there is no significant relation between Firm size and asset growth
H1= there is significant relation between Firm size and asset growth

Here in table value of correlation coefficient is 0.021 which indicates that there is a marginal
positive correlation between two variables and significant value is 0.921 which is more than
0.05. This means that null hypothesis is to be accepted which says there is no significant
relationship between Firm Size and Asset Growth.

Long term debt to capital and Short term debt to capital

Long term Short term debt

debt to to capital
capital
Pearson Correlation 1 .063
Long term debt to capital Sig. (2-tailed) .765
N 25 25
Pearson Correlation .063 1
Short term debt to capital Sig. (2-tailed) .765
N 25 25

H0= there is no significant relation between Long term debt to capital and total debt to capital.
H1= there is significant relation between Long term debt to capital and total debt to capital.

Here in table value of correlation coefficient is 0.063 which indicates that there is a marginal
positive correlation between two variables and significant value is 0.765 which is more than
0.05. This means that null hypothesis is to be accepted which says there is no significant
relationship between Long term debt to capital and Short term debt to capital.

70
 Regression

Interpretation of descriptive statistics of privet sector banks

Descriptive Statistics

Mean Std. Deviation N

Return on Assets 1.0736 .55802 25
Firm Size 7.9600 4.43751 25
Long term debt to capital .2148 0.02167 25
Short term debt to capital 5.3504 1.10768 25
Asset Growth 12.1560 2.11154 25

First table indicates descriptive statistics of all factors which affect the capital structure. We
have applied tools like mean and standard deviation. Mean is average value of data and while
standard deviation shows the fluctuation among the value. The mean of ROA is 1.0736 and
standard deviation is 0.55802. Firm Size mean is 7.9600 and standard deviation is 4.43751.
Asset Growth mean is 12.1560 and standard deviation 2.11154. LTDC mean is 0.2148 and
standard deviation is 0.02167. STDC mean is 5.3504 and standard deviation is 1.10768.

Model Summary

Mode R R Adjuste Std. Error Change Statistics

l Square dR of the R F df1 df2 Sig. F
Square Estimate Square Change Change
Chang
e
1 .658a .433 .320 .46025 .433 3.820 4 20 .018

A. Predictors: (Constant), FS, LTDC, AG, STDC

B. Dependent Variable: ROA

H0: The multiple regression measurement models with respect to capital structure is not
significant
H1: The multiple regression measurement models with respect to capital structure is significant

71
Interpretation of dependent variable ROA:

Second table indicates model summary whether selected model is significant or not. The
model summary shows the value of correlation coefficient and coefficients of determination.
Here the value of coefficient correlation is 0.658 which is more than 0.50. It shows very high
level of correlation coefficient among the dependent and independent factors.

Value of coefficient determination (R2) is 0.433 which shows the impact of independent
factors on dependent variable. Here this value is 0.433 which indicates that 43.30% changes
in ROA is because of all independent variables while remaining 56.7% changes occurs
because of all remaining factors. Usually this statistics indicates low impact but when more
than one factors influence the overall performance of banking sectors, it matches with the
bench mark of previous results. The adjusted r2 value shows the deviation from the
coefficient of determination because some of the independent variables are insignificant. Here
the value of F ratio is 3.820 and the value of significance is 0.018 which is less than 0.05
which show that there is significance difference between explained variance because of all
independent variables. Therefore, the multiple regression model is significant. It is vital to
evaluate whether any types of auto-correlations are present in a data. Here researcher has
applied Durbin-Watson test to check the auto-correlation in the data.

Anova

Model Sum of Squares df Mean Square F Sig.

Regression 3.237 4 .809 3.820 .018b
1 Residual 4.237 20 .212
Total 7.473 24

A. Dependent Variable: Return on Assets

B. Predictors: (Constant), Asset Growth, Firm Size, Long term debt to capital, Short term
debt to capital

Interpretation of dependent variable ROA:

H0: There is no significant impact of independent factors like FS, LTDC, AG, STDC on ROA
H1: There is significant impact of independent factors like FS, LTDC, AG, and STDC on ROA

72
From the ANOVA it clear that value of F ratio is 3.820 and significant value is 0.018 which
less than 0.05. Therefore researcher fails to accept the null hypothesis which means there is a
significant impact of combined influence of all independent factors like FS, LTDC, AG, and
STDC on ROA.
Coefficients

Model Unstandardized Standardiz T Sig. Correlations

Coefficients ed
Coefficien
t
s
B Std. Beta Zero Parti Part
Erro - al
r order
(Constant) 2.683 .540 4.971 .000
Firm Size 0.81 .000 .069 .220 .828 .140 .249 .037
Short
-.641 1.111 -.024 .056 .215 .053 .008 -.097
1
term debt to
capital
Asset Growth .325 .849 .065 1.09 .010 .136 .085 .064
Long
-.180 .053 -.039 0.391 .003 0.022 0.07 -.571
term debt to
capital

A. Dependent Variable: Return on Assets

Interpretation of dependent variable ROA:

H0: There is no significant impact of FS on ROA
H1: There is significant impact of FS on ROA

Here we have collected secondary data based on the balance sheets of various renowned
banks, later on such panel data is converted into pool data. Therefore here researcher has
considered standardized coefficients beta instead of un-standardized coefficients beta. Here
FS beta value
0.069 with t-statics 0.220 and significance value is 0. This indicates that FS positively
73
contributes to ROA, when ROA changes by 0.81 units then FS changes 1 unit.
Zero order correlation indicates the relationship between two variables, 0.140 indicates the
medium level correlation with ROA. When other variables remain constant then what is the
relationship with dependent variables is indicated by partial correlation. Here value of partial
correlation is 0.249 which shows that when all remaining independent variables are constant

74
that FS will create changes in the ROA. Here all values of VIF (Variance Influence Factors) are
less than 10 which show that researcher does not violate the assumption of multi-co linearity.

H0: There is no significant impact of AG on ROA

H1: There is significant impact of AG on ROA

Here AG beta value is 0.065 with t-statics 1.09 and significance value is 0.010 which
indicates that AG is positively contributing to ROA, when ROA changes by 0.325 units then
AG changes 1 unit.
Zero order correlations indicates the relationship between two variables, 0.136 indicates the
medium level correlation with ROA. Here the value of partial correlation is 0.064 which
shows that when all remaining independent variables remain constant then AG will create
changes in the ROA. Here all values of VIF (Variance Influence Factor) are less than 10
which shows that researcher does not violate the assumption of multi-co linearity.

H0: There is no significant impact of LTDC on ROA

H1: There is significant impact of LTDC on ROA

Here LTDC beta value is -0.039 with t-statics 0.391 and significance value is 0 which
indicates that LTDC is negatively contributing to ROA, when ROA changes by -0.180 units
then LTDC changes 1 unit.
Zero order correlations indicates the relationship between two variables, 0.022 indicates the
medium level correlation with ROA. Here value of partial correlation is 0.070 which shows
that when all remaining independent variables are remaining constant that LTDC will create
changes in the ROA. Here all values of VIF (Variance Influence Factor) is less than 10 which
shows that researcher does not violate the assumption of multi-co linearity.

H0: There is no significant impact of STDC on ROA

H1: There is significant impact of STDC on ROA

Here STDC beta value -0.024 with t-statics 0.056 and significance value is 0.215 which is
more than 0.05. So it indicates that STDC is negatively but not significantly contributing to
ROA, when ROA changes by -0.64 units then STDC changes 1 unit.

75
Zero order correlations indicates the relationship between two variables, 0.053 indicates the
medium level correlation with ROA. Here value of partial correlation is 0.008 which show
that when all remaining independent variables remain constant then STDC will create changes
in the ROA. Here all values of VIF (Variance Influence Factor) is less than 10 which shows
that researcher does not violate the assumption of multi-co linearity.

In the suggested predetermined multi regression model, the researcher evaluates the
significant impact of each independent factor on the dependent variable ROA. So far is FS,
AG and LTD are concerned, the significant value is less than 0.05 which indicates that these
factors contribute to dependent variable are ROA significantly. But significant value of SDTC
is 0.215 which is more than 0.05 which means that STDC is not significant to ROA. Hence
the following model is derived: Y=-2.683(a) +0.069 (FS) +0.065 (AG) - 0.039 (LTDC)+ e

Dependent variable ROE

Descriptive Statistics
Mean Std. Deviation N
Return on Equity 9.6928 4.25136 25
Firm Size 10.9600 0.43751 25
Short term debt to capital 15.350 1.1076 25
Asset Growth 14.1560 4.1115 25
Long term debt to capital 0.78 0.167 25

Interpretation of descriptive statistic

This table indicates descriptive statistics of all factors which are a part of capital structure. In
the descriptive statistics the mean of ROA is 9.6928 and standard deviation is 4.25136, Firm
Size mean is 10.9600 and standard deviation is 0.43751, Asset growth mean is 14.1560 and
standard deviation 4.1115, LTDC mean is 0.78 and standard deviation is 0.167, STDC mean
is
15.350 and standard deviation is 1.1076.

Model Summary

Model R Change Statistics

76
 R Adjusted Std. R F d df2 Sig. F
Square R Error Square Cha f Change
Square of the Chang n ge 1
Estimate e
1 .355a .126 -.048 4.35316 .126 3.723 4 20 0.002

A. Predictors: (Constant), long term debt to capital, Short term debt to capital, Asset Growth,
Firm Size
B. Dependent Variable: ROE

Interpretation of dependent variable ROE:

The above table indicates model summary whether selected model is significant or not. Here
the value of coefficient correlation is 0.355 which is more than Value of coefficient
determination (R2) is 0.126 it shows the impact of independent factors on dependent variable.
Here this value is 0.126 indicate that 12.6% changes in ROE is because of all independent
variables while remaining 87.4% changes occurs because of all remaining factors. The
adjusted r2 value shows the deviation from the coefficient of determination because some of
the independent variables are insignificant. Here the value of F ratio is 3.723 and the value of
significance is 0.002 which is less than 0.05 which shows that there is significance difference
between explained variance because of all independent variables and on explain variance.
Therefore, the multiple regression model is significant.

Anova

Model Sum of df Mean Square F Sig.

Squares
Regression 54.778 4 13.694 4.723 .005
1 Residual 378.999 20 18.950
Total 433.777 24

A. Dependent Variable: Return on Equity

B. Predictors: (Constant), Long term debt to capital, Short term debt to capital,
Asset Growth, Firm Size

Interpretation of dependent variable ROE:

From the ANOVA we want to understand whether there is any significant impact of
independent factors on the department variable

77
78
 Coefficients
Model Unstandardized Standardize t Sig. Correlations
Coefficients d
Coefficients
B Std. Beta Zero Partial Part
Erro -
r order
14.62
(Constant) 5.104 2.866 .010
7
Firm Size 1.186 .000 .131 .474 .040 .134 .106 .099
Short term
1 -0.656 10.511 -.118 -.443 .663 -.047 -.099 -.093
debt to capital
Asset Growth 0.354 8.032 3.114 .542 .594 .146 .120 .113
Long term
-.589 .502 -.266 -1.174 .04 -.321 -.254 -.245
debt to capital

H0: The multiple regression measurement model with respect to capital structure is not
significant

H1: The multiple regression measurement model with respect to capital structure is significant

Dependent is ROE and independent variables are FS, LTDC, AG, STDC. From the ANOVA
it clear that value of F is 4.723 and significant value is less than 0.05. So here we reject null
hypothesis and accept the alternative hypothesis. So there is significant impact on dependent
factors of independent factors.

Interpretation of dependent variable ROE:

H0: There is no significant impact of FS on ROE

H1: There is significant impact of FS on ROE

Here FS beta value is 0.131 with t-statics 0.474 and significance value is 0.00 which indicates
that FS is positively contributing to the ROE. When ROE changes is 1.186 units then FS
changes 1 unit. Zero order correlations indicate the relationship between two variables, 0.00
indicates the medium level correlation with ROE. Here value of partial correlation is 0.106
which shows that when all remaining independent variables remain constant then FS will

79
create changes in the ROE Here all values of VIF (Variance Influence Factor) are less than 10
which shows that researcher does not violate the assumption of multicollinearity.

80
H0: There is no significant impact of AG on ROE

H1: There is significant impact of AG on ROE

Here AG beta value is 0.114 with t-statics 3.42 and significance value is 0.009 which
indicates that AG is positively contributing to ROE, when ROE changes is 0.364 units then
AG changes 1 unit. Zero order correlations indicates the relationship between two variables,
0.146 indicates the medium level correlation with ROE. Here value of partial correlation is
0.120 which show that when all remaining independent variables remain constant then AG
will create changes in the ROE. Here all values of VIF (Variance Influence Factor) are less
than 10 which shows that researcher does not violate the assumption of multicollinearity.

H0: There is no significant impact of LTDC on ROE

H1: There is significant impact of LTDC on ROE

Here LTDC beta value is -0.266 with t-statics -1.174 and significance value is. 0.04 indicates
that LTDC is negatively contributing to ROE, when ROE changes - 0.589 units then LTDC
changes 1 unit. Zero order correlations indicates the relationship between two variables, -
0.321 indicates the medium level correlation with ROE. Here value of partial correlation is -
0.254 show that when all remaining independent variables remain constant that LTDC will
create changes in the ROE. Here all values of VIF (Variance Influence Factor) are less than
10 which show that researcher does not violate the assumption of multicollinearity.

H0: There is no significant impact of STDC on ROE

H1: There is significant impact of STDC on ROE

Here STDC beta value is -0.118 with t-statics -0.443 and significance value is 0.663 indicates
that STDC is negatively but not significantly contributing on ROE, when ROE changes -0.656
units then STDC changes 1 unit. Zero order correlations indicates the relationship between
two variables, - 0.047 indicates the medium level correlation with ROE. Here value of partial
correlation is -0.099 which shows that when all remaining independent variables remain
constant that STDC will create changes in the ROE. Here all values of VIF (Variance
Influence Factor) are less than 10 which shows that researcher does not violate the assumption
of multicollinearity.

Here, the researcher has evaluated the significant impact of each independent factor on the
dependent variable ROE. So far is FS, AG, LTDC and TDTC are concerned, the significant
value is less than 0.05 which indicates that these factors contribute to dependent variable are
81
ROE significantly. But significant value of SDTC is 0.663 which is more than 0.05 which
means that STDC is not significant to ROE. Hence the following model is derived Y=14.62(a)
+0.131(FS) +3.114(AG)-0.266(LTDC) + e

Dependent Variable EPS

Descriptive Statistics
Mean Std. Deviation N
Earnings per share 24.0632 21.53705 25
Firm Size 7.9600 0.43751 25
Short term debt to capital 16.350 2.1076 25
Asset Growth 14.156 3.1115 25
Long term debt to capital 0.7840 0.4583 25

Interpretation of descriptive statistic:

In the Descriptive statistics the mean of EPS is 24.0632 and standard deviation is 21.53705,
Firm Size mean is 7.9600 and standard deviation is 0.43751, Asset growth mean is 14.156 and
standard deviation 3.1115, LTDC mean is 0.7840 and standard deviation is 0.4583, STDC
mean is 16.350 and standard deviation is 2.1076.

Model Summary
Mode R R Adjusted Std. Error Change Statistics
l Square R of the R F d df2 Sig. F
Square Estimate Square Chan f Change
Chang ge 1
e
1 .607a .369 .243 18.74306 .369 2.922 4 20 .044

A. Predictors: (Constant), long term debt to capital, Short term debt to capital, Asset
Growth, Firm Size
B. Dependent Variable: Earning Per Share

Interpretation of dependent variable EPS:

Second table indicates model summary weather selected model is significant or not in the
value of model summary is the value of correlation coefficient and coefficients of
determination here the value of coefficient correlation is 0.607 which is more than 0.50.It
shows high level of correlation coefficient of among the dependent and independent factors.

82
Value of coefficient determination (R2) is 0.369 which shows the impact of independent
factors on dependent variable. Here this value is 0.369 indicates that 36.90% changes in EPS
is because of all independent variables while remaining 61.10% changes occurs because of all
remaining factors. The adjusted r2 value shows the deviation from the coefficient of
determination because some of the independent variables are insignificant. Here the value of
F ratio is 2.922 and the value of significance is 0.044 which is less than 0.05 which shows that
there is significance difference between explained variance because of all independent
variables and on explained variance. Therefore, the multiple regression model is significant.

Model Sum of df Mean Square F Sig.

Squares
Regression 4106.228 4 1026.557 2.922 .044b
1 Residual 7026.042 20 351.302
Total 11132.270 24

A. Dependent Variable: Earnings per share

B. Predictors: (Constant), long term debt to capital, Short term debt to capital, Asset Growth,
Firm Size

Interpretation of dependent variable EPS:

From the ANOVA we want to understand whether there is any significant impact of
independent factors on the dependent variable.

H0: there is no significant impact on dependent factor of independent factor

H1: there is significant impact on dependent factor of independent factor

Dependent variable is EPS and independent variables are FS, LTDC, AG, and STDC. From the
ANOVA it clear that value of F is 2.922 and significant value is which 0.044 which is less than
0.05. So here we the reject null hypothesis and accept the alternative hypothesis. So there is
significant impact on dependent factors of independent factors.

Coefficients
Model Unstandardized Standardized T Sig. Correlations
Coefficients Coefficients
B Std. Beta Zero- Partial Part
Error order
1 (Constant) 35.928 21.978 1.635 .118

83
 Firm Size 1.811 .000 .043 .709 .008 .528 .352 .299
Short term
-7.259 45.258 -.086 -.381 .007 -.292 .085 .068
debt to capital
Asset Growth 0.035 34.583 .051 1.005 .062 -.017 -.039 -.031
Long term
-3.651 2.160 -.326 -1.691 .006 .419 .354 -.300
debt to capital

A. Dependent Variable: Earnings per share

Interpretation of dependent variable EPS:

H0: There is no significant impact of FS on EPS

H1: There is significant impact of FS on EPS

Here FS beta value 0.043 with t-statics 0.709 and significance value is 0.000 indicates that FS
is positively contributing to EPS, when EPS changes 1.90 units then FS changes 1 unit. Zero
order correlations indicates the relationship between two variables, 0.528 indicates the
medium level correlation with EPS. Here value of partial correlation is 0.352 which shows
that when all remaining independent variables are constant then FS will create changes in the
EPS. Here all values of VIF (Variance Influence Factor) are less than 10 which shows that
researcher does not violate the assumption of multicollinearity.

H0: There is no significant impact of AG on EPS

H1: There is significant impact of AG on EPS

Here AG beta value 0.051 with t-statics 1.005 and significance value is 0.062 indicates that
AG is positively contributing to EPS, when EPS changes 0.035 units then AG changes 1 unit.
Zero order correlations indicates the relationship between two variables, - 0.017
indicates the medium level correlation with EPS. Here value of partial correlation is -0.039
which shows that when all remaining independent variables are constant then AG will create
changes in the EPS. Here all values of VIF (Variance Influence Factor) are less than 10 which
shows that researcher does not violate the assumption of multicollinearity.

H0: There is no significant impact of LTDC on EPS

H1: There is significant impact of LTDC on EPS

84
Here LTDC beta value is -0.086 with t-statics -0.381 and significance value is 0.006 which
indicates that LTDC is negatively contributing to EPS, when EPS changes -3.651 units then
LTDC changes 1 unit. Zero order correlations indicates the relationship between two
variables,
0.419 indicates the medium level correlation with EPS. Here value of partial correlation is
0.354 which shows that when all remaining independent variables are constant then LTDC
will create changes in the EPS. Here all values of VIF (Variance Influence Factor) are less
than 10 which shows that researcher does not violate the assumption of multicollinearity

H0: There is no significant impact of STDC on EPS

H1: There is significant impact of STDC on EPS

Here STDC beta value is -0.262 with t-statics -0.368 and significance value is 0.007 indicates
that STDC is negatively but not significantly contributing on EPS, when EPS changes -7.259
units then STDC changes 1 unit. Zero order correlations indicates the relationship between
two variables, - 0.307 indicates the medium level correlation with EPS. Here value of partial
correlation is -0.292 which shows that when all remaining independent variables are constant
then STDC will create changes in the EPS. Here all values of VIF (Variance Influence Factor)
are less than 10 which shows that researcher does not violate the assumption of
multicollinearity.

Here, the researcher has evaluated the significant impact of each independent factor on the
dependent variable EPS. So far is FS, AG, LTDC and TDTC are concerned, the significant
value is less than 0.05 which indicates that these factors contribute to dependent variable are
EPS significantly. But significant value of SDTC is 0.58 which is more than 0.05 which
means that STDC is not significant to EPS. Hence the following model is derived
Y=35.928(a)+ 0.43(FS)+0.51(AG)-0.326(LTDC)+ e

85
 Comparison of interbank financial performance within sector

Research Hypothesis: There is no significance difference in the financial performance of

different banks within sector

Capital adequacy ratio (Tier – I)

H0 = There is no significance difference in the financial performance of different new private

sector banks in capital adequacy ratio (Tier – I). (µ1 = µ2 = µ3…. = µ7)

H1 = There is significance difference in the financial performance of different new private

sector banks in capital adequacy ratio (Tier – I). (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 116.611 20 5.831 2.087 .000
Within Groups 11.174 4 2.793
Total 127.784 24

Interpretation:

F value (2.087) is higher than F critical value (1.827) which indicates that there is significance
difference in financial performance of different new private sector banks in capital adequacy
ratio(Tier – I).

Capital adequacy ratio (Tier – II)

H0 = There is no significance difference in the financial performance of different new private

sector banks in capital adequacy ratio (Tier – II). (µ1 = µ2 = µ3…. = µ7)

H1 = There is significance difference in the financial performance of different new private

sector banks in capital adequacy ratio (Tier – II). (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 19.488 20 .974 1.286 .000
Within Groups 3.032 4 .758
Total 22.519 24

86
Interpretation:

F value (1.286) is higher than F critical value (1.129) which indicates that there is significance
difference in financial performance of different new private sector banks in capital adequacy
ratio(Tier – II).

Credit to Deposit Ratio

H0 = There is no significance difference in the financial performance of different new private

sector banks in credit to deposit ratio. (µ1 = µ2 = µ3…. = µ7)

H1 = There is significance difference in the financial performance of different new private

sector banks in credit to deposit ratio. (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 641.640 20 32.082 2.210 .000
Within Groups 106.031 4 26.508
Total 747.671 24

Interpretation:

F value (2.210) is higher than F critical value (1.705) which indicates that there is significance
difference in financial performance of different new private sector banks in credit to deposit
ratio.

Investment to deposit Ratio

H0 = There is no significance difference in the financial performance of different new private

sector banks in investment to deposit ratio. (µ1 = µ2 = µ3…. = µ7)

H1 = There is significance difference in the financial performance of different new private

sector banks in investment to deposit ratio. (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 144.361 20 7.218 2.557 .001
Within Groups 51.860 4 12.965
Total 196.220 24

87
Interpretation:

F value (2.557) is higher than F critical value (1.129) which indicates that there is significance
difference in financial performance of different new private sector banks in investment to
deposit ratio.

Ratio of deposit to total liabilities

H0 = There is no significance difference in the financial performance of different new private

sector banks in deposit to total liabilities ratio. (µ1 = µ2 = µ3…. = µ7)

H1 = There is significance difference in the financial performance of different new private

sector banks in deposit to total liabilities ratio. (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 5687.301 20 284.365 2.442 .000
Within Groups 465.787 4 116.447
Total 6153.088 24

Interpretation:

F value (2.442) is higher than F critical value (2.218) which indicates that there is significance
difference in financial performance of different new private sector banks in deposit to total
liabilities ratio.

Ratio of demand & saving bank deposit to total deposit

H0 = There is no significance difference in the financial performance of different new private

sector banks in ratio of demand and saving bank deposit to total deposit. Management
Department, Indus University, 2019 (µ1 = µ2 = µ3…. = µ7)

H1 = There is significance difference in the financial performance of different new private

sector banks in ratio of demand and saving bank deposit to total deposit. (µ1 ≠ µ2 ≠ µ3…. ≠
µ7)

ANOVA

88
 Sum of Squares df Mean Square F Sig.
Between Groups 1073.259 20 53.663 3.689 .000
Within Groups 127.098 4 31.775
Total 1200.357 24

Interpretation:

F value (3.689) is higher than F critical value (2.218) which indicates that there is significance
difference in financial performance of different new private sector banks in ratio of demand
and saving bank deposit to total deposit.

Ratio of priority sector advance to total advance

H0 = There is no significance difference in the financial performance of different new private

sector banks in ratio of priority sector advance to total advance. (µ1 = µ2 = µ3…. = µ7)

H1 = There is significance difference in the financial performance of different new private

sector banks in ratio of priority sector advance to total advance. (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 1962.523 20 98.126 2.420 .003
Within Groups 162.193 4 40.548
Total 2124.716 24

Interpretation:

F value (2.420) is higher than F critical value (2.218) which indicates that there is significance
difference in financial performance of different new private sector banks in ratio of priority
sector advance to total advance.

Ratio of secured advance to total advance

H0 = There is no significance difference in the financial performance of different new private

sector banks in ratio of secured advance to total advance. (µ1 = µ2 = µ3…. = µ7)

H1 = There is significance difference in the financial performance of different newprivate

sector banks in ratio of secured advance to total advance. (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

89
 Sum of Squares df Mean Square F Sig.
Between Groups 2064.467 20 103.223 2.309 .000
Within Groups 178.793 4 44.698
Total 2243.261 24

Interpretation:

F value (2.309) is higher than F critical value (2.181) which indicates that there is significance
difference in financial performance of different new private sector banks in ratio of secured
advance to total advance.

Ratio of term loan to total advance

H0 = There is no significance difference in the financial performance of different new private

sector banks in ratio of term loan to total advance. (µ1 = µ2 = µ3…. = µ7)

H1 = There is significance difference in the financial performance of different new private

sector banks in ratio of term loan to total advance. (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 2916.778 20 145.839 3.937 .006
Within Groups 148.159 4 37.040
Total 3064.938 24

Interpretation:

F value (3.937) is higher than F critical value (2.218) which indicates that there is significance
difference in financial performance of different new private sector banks in ratio of term loan
to total advance.

Ratio of investment in non-approved securities to total investment

H0 = There is no significance difference in the financial performance of different new private

sector banks in ratio of investment in non-approved securities to total investment. (µ1 = µ2 =
µ3…. = µ7)

90
H1 = There is significance difference in the financial performance of different new private
sector banks in ratio of investment in non-approved securities to total investment. (µ1 ≠ µ2 ≠
µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 1673.338 20 83.667 4.383 .000
Within Groups 241.960 4 60.490
Total 1915.298 24

Interpretation:

F value (4.383) is higher than F critical value (2.218) which indicates that there is significance
difference in financial performance of different new private sector banks in ratio of
investment in non-approved securities to total investment.

Ratio of interest income to total assets

H0 = There is no significance difference in the financial performance of different new private

sector banks in ratio of interest income to total assets. (µ1 = µ2 = µ3…. = µ7)

H1 = There is significance difference in the financial performance of different new private

sector banks in ratio of interest income to total assets. (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 587.224 20 29.361 2.787 .000
Within Groups 42.136 4 10.534
Total 629.360 24

Interpretation:

F value (2.787) is lower than F critical value (2.897) which indicates that there is no
significance difference in financial performance of different new private sector banks in ratio
of interest income to total assets.

Ratio of non-interest income to total assets

91
H0 = There is no significance difference in the financial performance of different new private
sector banks in ratio of non-interest income to total assets. (µ1 = µ2 = µ3…. = µ7)

H1 = There is significance difference in the financial performance of different new private

sector banks in ratio of non-interest income to total assets. (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 1756.933 20 87.847 2.773 .000
Within Groups 126.727 4 31.682
Total 1883.660 24

Interpretation:

F value (2.773) is higher than F critical value (2.218) which indicates that there is significance
difference in financial performance of different new private sector banks in ratio of non-
interest income to total assets.

Ratio of operating profit to total assets

H0 = There is no significance difference in the financial performance of different new private

sector banks in ratio of operating profit to total assets. (µ1 = µ2 = µ3…. = µ7) Management
Department, Indus University, 2019

H1 = There is significance difference in the financial performance of different new private

sector banks in ratio of operating profit to total assets. (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 1702.799 20 85.140 2.347 .000
Within Groups 159.467 4 39.867
Total 1862.266 24

Interpretation:

F value (2.347) is higher than F critical value (2.218) which indicates that there is significance
difference in financial performance of different new private sector banks in ratio of operating
profit to total assets.

92
Cost of deposit

H0 = There is no significance difference in the financial performance of different new private

sector banks in ratio of cost of deposit. (µ1 = µ2 = µ3…. = µ7)

H1 = There is significance difference in the financial performance of different new private

sector banks in ratio of cost of deposit. (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 1534.257 20 76.713 3.678 .003
Within Groups 452.636 4 113.159
Total 1986.893 24

Interpretation:

F value (3.678) is higher than F critical value (2.218) which indicates that there is significance
difference in financial performance of different new private sector banks in ratio of cost of
deposit.

Cost of borrowing

H0 = There is no significance difference in the financial performance of different new private

sector banks in ratio of cost of borrowing. (µ1 = µ2 = µ3…. = µ7) H1 = There is significance
difference in the financial performance of different new private sector banks in ratio of cost of
borrowing. (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 897.226 20 44.861 2.507 .000
Within Groups 353.898 4 88.475
Total 1251.124 24

Interpretation:

F value (2.507) is higher than F critical value (2.218) which indicates that there is significance
difference in financial performance of different new private sector banks in ratio of cost of
borrowing.

93
Cost of fund

H0 = There is no significance difference in the financial performance of different new private

sector banks in ratio of cost of fund. (µ1 = µ2 = µ3…. = µ7)

H1 = There is significance difference in the financial performance of different new private

sector banks in ratio of cost of fund. (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 729.810 20 36.490 2.721 .010
Within Groups 84.808 4 21.202
Total 814.617 24

Interpretation:

F value (2.721) is higher than F critical value (2.218) which indicates that there is significance
difference in financial performance of different new private sector banks in ratio of cost of
fund.

Return on investment

H0 = There is no significance difference in the financial performance of different new private

sector banks in ratio of return on advance. (µ1 = µ2 = µ3…. = µ7)

H1 = There is significance difference in the financial performance of different new private

sector banks in ratio of return on advance. (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 1942.149 20 97.107 3.889 .000
Within Groups 205.661 4 51.415
Total 2147.809 24

Interpretation:

F value (3.889) is higher than F critical value (2.218) which indicates that there is significance
difference in financial performance of different new private sector banks in ratio of return on
advance.

94
Gross NPA as percentage of assets

95
H0 = There is no significance difference in the financial performance of different new private
sector banks in ratio of gross NPA as percentage of assets. (µ1 = µ2 = µ3…. = µ7)

H1 = There is significance difference in the financial performance of different new private

sector banks in ratio of gross NPA as percentage of assets. (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 7.493 20 .375 4.562 .007
Within Groups 2.667 4 .667
Total 10.160 24

Interpretation:

F value (4.562) is higher than F critical value (2.218) which indicates that there is significance
difference in financial performance of different new private sector banks in ratio of gross
NPA as percentage of assets.

Net NPA as percentage of assets

H0 = There is no significance difference in the financial performance of different new private

sector banks in ratio of net NPA as percentage of assets. (µ1 = µ2 = µ3…. = µ7) H1 = There
is significance difference in the financial performance of different new private sector banks in
ratio of net NPA as percentage of assets. (µ1 ≠ µ2 ≠ µ3…. ≠ µ7)

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups .870 20 .043 3.787 .000
Within Groups .221 4 .055
Total 1.090 24

Interpretation:

F value (3.787) is higher than F critical value (2.218) which indicates that there is significance
difference in financial performance of different new private sector banks in ratio of net NPA
as percentage of assets.

96
 Chapter – 5
Findings and Suggestions

97
 Findings

ROE and EPS of correlation coefficient is 0.785 it indicates that there is positive correlation
between two variables and significant value is 0.00 which is less than 0.05. It indicates that
null hypothesis is rejected there is significant relationship between earning per share and
return of equity so there is positive impact of earning per share and return of equity.

ROE and ROA of correlation coefficient is 0.918 it indicates that there is positive correlation
between two variables and significant value is 0.00 which is less than 0.05. It indicates that
null hypothesis is rejected there is significant relationship between return on assets and return
of equity so there is positive impact of return on assets and return of equity.

EPS and ROA of correlation coefficient is 0.773 it indicates that there is positive correlation
between two variables and significant value is 0.00 which is less than 0.05. It indicates that
null hypothesis is rejected there is significant relationship between Earning per share and
return on assets so there is positive impact of Earning per share and return on assets.

Firm size and asset growth of correlation coefficient is 0.021 it indicates that there is marginal
positive correlation between two variables and significant value is 0.921 which is more than
0.05. It indicates that null hypothesis is accepted there is no significant relationship between
Firm size and asset growth so there is no positive impact of Firm size and asset growth.

Long term debt to capital and short term debt to capital of correlation coefficient is 0.063 it
indicates that there is marginal positive correlation between two variables and significant
value is 0.765 which is more than 0.05. It indicates that null hypothesis is accepted there is no
significant relationship between Long term debt to capital and short term debt so there is no
positive impact of Long term debt to capital and short term debt.

The following Table shows positive and negative impacts of individual independent variables
on each dependent variable

Private Sector Banks-Positive Impact

Return on Assets Return on Equity Earnings per Share

Firm Size 0.069 0.131 0.043

Asset Growth 0.065 0.114 0.051

98
Private Sector Banks-Negative Impact

Return on Return on Earnings per

Assets Equity Share

Long Term Debt -0.039 -0.266 -0.326

to Capital

Short term debt -0.024 -0.118 -0.086

to Capital

Dependent Variables Private Sector Banks

R R SQUARE
Return on Assets
0.658a 0.433
Return on Equity
0.355a 0.126
Earnings per Share
0.607a 0.369

The value of return on asset and earning per share is more than 0.50. So it shows very high
level of correlation coefficient of among the dependent and independent factors and the return
on equity have low level correlation coefficient among the dependent and independent factors.

This implies presence of negative trade-off between firm’s leverage and firm’s performance.
This effect was not observed under short term debt to equity ratio which indicated positive
impact of using customer deposits and other short term financing on performance of private
bank in India.

On the other hand, firm size experienced an optimistic connection with variables (ROA, and
EPS) and negative with ROE.

The results show that total debt to equity ratio, long term debt to equity ratio, and short term
debt to asset ratio have significant positive association while short term debt to equity ratio,
total debt to asset ratio and long term debt to asset ratio all have significant negative
association with return on asset.

From the study results it was deduced that, the impact of capital structure on firm
performance depends on the variables and indicators that are used to approximate capital
structure and performance.

In private bank change the independent variable in ROE there is 12.60% effect of ROE
dependent variable. Second is NPO is dependent to other independent variable so that’s why
99
in

10
0
NPO there are 43.30% effect in NPO dependent variable. Third is dependent EPS and so that
time independent variable are change than the EPS are also effect of 36.90% in public sector
banks in India.

The findings of this study were consistent with most of previous results but did not provide a
single stand point on whether leverage has impact on the firm performance. The firm leverage
depends on the estimation variables hence should be critically assessed before making
generalization.

10
1
 Suggestions

Private bank have a chance to more and more using loan facility to customer for a better
assets and better liabilities so that time RBI also help for private banks also use shares of
private banks so that debts also use of private banks .

Private sector in India prefer to use more short term debts in form of deposits other than
commercial debts.

Timely review of their cost of capital of different sources (debt, equity) Is necessary in
banking industry.

Private bank should improve their capital structure.

Private sector bank should try to reduce their overall cost of

capital Bank should have liquidity in their capital structure.

10
2
Chepter-6
Conclusion

10
3
 Conclusion

The impact of capital structure on performance has recently become an important issue in the
Indian banking sector. This study examines the impact of capital structure on the performance
of the four pillars of the Indian banking sector classification. It also attempts to show how the
use of different methods can affect the empirical results that analyze the relationship between
capital structure and performance. The results of the study confirmed a strong positive
dependence of short-term debt on capital on all profitability measures ROA, ROE and EPS.
Long-term debt on capital with a negative ratio to return on assets ROA, return on equity
ROE and earnings per share EPS. The company size showed an optimistic correlation with the
variables ROA and EPS and negative with ROE.

Asset Growth proposed a positive ratio between return on capital employed and return on
equity as well as earnings per share. Now, by analysing the results of each variable, we can
conclude that there is a positive relationship between short-term debt and profitability of
Indian banks. The results suggest that all capital structure variables.

We also found that growth opportunities, size and inflation are positively correlated, while
liquidity and GDP have a negative impact on the performance of banks in the developing
economy, i.e. India. We therefore conclude that there is a significant negative impact of the
capital structure on the performance of Indian banks. These negative effects can be explained
by the characteristics of an underdeveloped bond and equity market in developing countries
such as India, such as information asymmetry, strong debt ties, etc., which have high
borrowing costs. This study suggests that financial managers should try to finance from
retained earnings rather than rely heavily on debt in their capital structure.

However, bank can use debt as a last resort. With the goal of maximizing company
performance, managers should strive to achieve and maintain an optimal capital structure as
far as possible. These negative effects also suggest that legislative rules and policies need to
be designed to help companies significantly reduce their reliance on excessive debt. Although
we observed significant negative effects of the choice of capital structure on the performance
of the banks surveyed, this survey still suffers from a comprehensive and systematic database
for all banks in India.

10
4
 References

Ahmad, S. R., & Khan, M. N. (2021). Efficiency Measurement of Indian Banking Industry: An
Empirical. International Journal of Financial Research, 12, 135.

Akbar, T. (2019). The Performance of Banks in Indonesia Based on Capital Perspective

(BUKU),. Account and Financial Management Journal, 4(6), 1965.

Bapat, D., & Sagar, M. (2016). Examining Relationship of Income Diversification, Asset. 8(1).

Bhatia, S. (2019). Bank Capital Structure and Monetary Policy Transmission: Evidence from.

Fauziah, F., & Iskandar, R. (2015). Determinants of Capital Structure in Indonesian Banking
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Banks. International Journal of.

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SECTOR IN GCC:. /journal.aefr/2015.5.7/102.7.959.972( 2222-6737).

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COMMERCIAL BANKS IN. Osmania Journal of International Business Studies( 00973-5372).

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International Monthly Refereed Journal of Research in, 3(5).

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Business and Economic Research. International Journal of Applied Business, 15, 303.

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Journal of Management, 14(I), 161.

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Bank Capital and the Cost of Financial. International Journal of Financial Studies .

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on Profitability of Public and Private. IOSR Journal of Business and Management (IOSR-JBM),
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Baxi, B., & Bhatt, V. (2019). A study of impact of capital structure on the profitability of
public and private sector banks in india. indus institute of management studies, Management,
ahmedabad.

Bhatt, V. G., & Trivedi, T. M. A STUDY ON RELATIONSHIP AMONGST

DESIGNATION AND CHANGE READINESS WITHIN EMPLOYEES OF BANKING
SECTOR IN GUJARAT.

Bhatt, H. R. D. V. (2020). A study on impact of E service quality dimensions of online

shopping platforms on overall service experience. Alochana Chakra Journal, 1066-1088.

Bhatt, H. R. D. V. A study on customers’ perceptions towards E service quality dimensions

and their satisfaction of online shopping platforms.

Bhatt, H. V. D. V. EXPLORING THE VARIOUS FACTORS INFLUENCING THE

READINESS FOR THE ORGANIZATIONAL CHANGES AT WORK PLACE WITH
RESPECT TO BANKING SECTOR OF GUJARAT.

Bhatt, B. B. C. D. V. AN EXHAUSTIVE COMPARISON ON SELECTED PUBLIC

SECTOR AND PRIVATE SECTOR BANKS WITH RESPECT TO VARIOUS
PARAMETERS RELATED TO PROFITABILITY INDEX.

Raval, H. P., & Bhatt, V. (2021). ASSESSMENT OF SERVICE QUALITY OF SELECTED

ONLINE SHOPPING PLATFORMS.

Malek, M. S., Bhatt, V., & Patel, A. (2020). Global, National and Local Growth of road
projects through PPP. TEST Eng Manage, 25837-25860.

Vora, H., Jadhav, D., & Bhatt, V. (2020). AN EMPIRICAL STUDY ON EVALUATING
AND VALIDATE THE FACTORS AFFECTING TO SATISFACTION OF HIGHER
EDUCATION. PalArch's Journal of Archaeology of Egypt/Egyptology, 17(12), 1759-1771.

Bhatt, V., & Shastri, S. (2018). Classification of factors respect to Microfinance relate to
Women Empowerment in women of rural Gujarat. International Journal of Reviews and
Research in Social Sciences, 6(3), 273-278.

Bhatt, V. (2021). An empirical study to evaluate factors affecting customer satisfaction on the
adoption of Mobile Banking Track: Financial Management. Turkish Journal of Computer and
Mathematics Education (TURCOMAT), 12(10), 5354-5373.

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Bhatt, V., & Shastri, S. (2018). Classification of factors respect to Microfinance relate to
Women Empowerment in women of rural Gujarat. International Journal of Reviews and
Research in Social Sciences, 6(3), 273-278.

Bhatt, V. (2021). An empirical study to evaluate factors affecting customer satisfaction on the
adoption of Mobile Banking Track: Financial Management. Turkish Journal of Computer and
Mathematics Education (TURCOMAT), 12(10), 5354-5373.

Joshi, D., & Bhatt, V. (2018). Positive Impact of Social Media on youth An Empirical Study
in Ahmedabad city. International Journal of Reviews and Research in Social Sciences, 6(4),
469- 474.

Shah, P. H., Mamtha, M. T., Bhatt, V., Zatakiya, D., Shah, S. H., & Gandhi, B. (2019). Effect
Of Antimicrobial Activity Of Herbal Medicines On Streptococcus Mutans. National Journal
of Integrated Research in Medicine, 10(6).

Sheth, J. D., & Bhatt, V. (2019). A Study on Factors Affecting Distribution Channels of
Indian Mutual Fund Industry with Special Reference to No-Entry Load Regime-Post 2009.
Research Journal of Humanities and Social Sciences, 10(2), 691-696.

Bhatt, V. (2021). An Empirical Study On Analyzing A User’s Intention Towards Using

Mobile Wallets; Measuring The Mediating Effect Of Perceived Attitude And Perceived Trust.
Turkish Journal of Computer and Mathematics Education (TURCOMAT), 12(10), 5332-
5353.

Patel, I. H., & Bhatt, V. (2018). Development of Model to Evaluate Service Quality Gap in
the Generation of Digital Banking.

Bhatt, V. (2021). An Empirical Study On Analyzing A User’s Intention Towards Using

Mobile Wallets; Measuring The Mediating Effect Of Perceived Attitude And Perceived Trust.
Turkish Journal of Computer and Mathematics Education (TURCOMAT), 12(10), 5332-
5353.

Prajapati, K., & Bhatt, V. (2019). A Study on Perception of Brand Extension by FMCG
Consumer in Ahmedabad. Research Journal of Humanities and Social Sciences, 10(3), 747-
753.

Bhatt, V., & Kureshi, F. (2018). Digital Banking-Relation of Determined variables related to
Service Quality. International Journal of Reviews and Research in Social Sciences, 6(4), 486-
491.
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Patel, I. H., & Bhatt, V. CLASSIFICATION OF FACTORS AFFECTING OVERALL
SERVICE QUALITY AND CUSTOMER SATISFACTION FOR DIGITAL BANKING
SERVICE IN AHMEDABAD. Complexity, 8, 0-899.

Bhatt, V., & Shastri, S. (2018). Measuring the Impact of Microfinance on women
empowerment among women of Rural Gujarat. Int. J. Rev. and Res. Social Sci, 6(3), 123-124.

Nagvadia, M. J., & Bhatt, V. A STUDY ON FACTORS INFLUENCING CONSUMER'S

ONLINE BUYING BEHAVIOUR.

HiralBorikar, M., & Bhatt, V. (2020). A Classification of Senior Personnel with Respect to
Psychographic and Demographic Aspect of Workplace Stress in Financial Services.

Bhatt, V., & Prajapati, M. F. (2018). An Empirical study on Consumer’s Securitization and
faith on online payment in Gujarat. Int. J. Rev. and Res. Social Sci, 6(3), 291-296.

Bhatt, V., & Joshi, D. (2019). An empirical study on demographic factors influencing
consumers’ usage of social media. Research Journal of Humanities and Social Sciences,
10(2), 709-714.

Joshi, D., & Bhatt, V. A STUDY ON FACTORS INFLUENCING CONSUMER’S

PREFERENCE WHILE MAKING PURCHASE DECISION OF FIRST OWN CAR IN
AHMEDABAD CITY.

Farana Kureshi, D., & Bhatt, V. (2018). Impact of various factors towards the Service Quality
of Digital Banking. Int. J. Rev. and Res. Social Sci, 6(4), 479-485.

Bhatt, V. G., & Trivedi, T. M. A STUDY ON RELATIONSHIP AMONGST

DESIGNATION AND CHANGE READINESS WITHIN EMPLOYEES OF BANKING
SECTOR IN GUJARAT.

Bhatt, V., & Saiyed, M. (2015). AN EMPIRICAL STUDY ON BRAND SWITCHING

BEHAVIOR OF CONSUMERS IN THE FMCG INDUSTRY WRT AHMEDABAD.
Frontiers
in Mathematics, 2015.

Bhatt, V., & Parekh, B. (1997). EMPIRICAL ANALYSIS OF NON PERFORMING ASSETS
OF MICROFINANCE INSTITUTIONS IN GUJARAT. sustainable development, 3.

ShivakrishnaDasi, B. D. V. P., Bhatt, V., Doshi, K., MEFGI, R., & AHMC&RI, R. QRS
Wave Detection In Matlab Using Wavelet Transform.

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Bhatt, V. G., & Trivedi, T. M. A STUDY ON JOB SATISFACTION OF BANK
EMPLOYEES WITH RESPECT TO READINESS TO CHANGE IN WORK
ENVIRONMENT IN MAJOR CITIES OF GUJARAT.

Banker, A., Jadhav, D., & Bhatt, V. (2020). A CLASSIFICATION OF E-BANKING USERS
BASED ON IMPACT OF SERVICE QUALITY PARAMETERS IN BANKING
INDUSTRY. PalArch's Journal of Archaeology of Egypt/Egyptology, 17(12), 1746-1758.

Jadhav, D. S., Upadhyay, N., & Bhatt, V. (2021). Applying the Customer Based Brand Equity
Model in examining Brand Loyalty of Consumers towards Johnson & Johnson Baby Care
Products: A PLS-SEM Approach. ADBU Journal of Engineering Technology, 10(2).

Singh, J., & Yadav, P. (2012). Micro finance as a tool for financial inclusion & reduction of
poverty. Journal of Business Management & Social Sciences Research (JBM&SSR), 1(1), 1-
12.

Joshi, D., & Bhatt, V. (2021). DOES THE ADVERTISEMENT AND SALES PROMOTION
HAVE IMPACT ON BEHAVIORAL INTENTIONS OF ONLINE FOOD DELIVERY
APPLICATION USERS?. PalArch's Journal of Archaeology of Egypt/Egyptology, 18(7),
1398-1418.

Ajmera, H., & Bhatt, V. (2020). Factors affecting the consumer’s adoption of E-wallets in India:
An empirical study. Alochana Chakra J, 9, 1081-1093.

Borikar, M. H., & Bhatt, V. (2020). Measuring impact of factors influencing workplace stress
with respect to financial services. Alochana Chakra Journal, ISSN, (2231-3990),

Nayak, K. M., Bhatt, V., & Nagvadia, J. (2021). MEASURING IMPACT OF FACTORS
INFLUENCING TO CONSUMER BUYING INTENTION WITH RESPECT TO ONLINE
SHOPPING. International Journal of Management (IJM), 12(1).

Bhatt, V. (2021). “Does Experience of Distributor Has Moderating Effect on The Mediating
Factors Affecting the Performance of Mutual Fund Distributors?. Turkish Journal of
Computer and Mathematics Education (TURCOMAT), 12(12), 4016-4031.

Prajapati, K., & Bhatt, V. (2019). A Study of an Influencing Factor in the Expansion of Brand
in the Road Machine Market: An Impassive Study on the Heavy Machinery Production
Company (HEPCO). Research Journal of Humanities and Social Sciences, 10(3), 813-821.

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Prajapati, Kalpesh, and Viral Bhatt. "A Study of an Influencing Factor in the Expansion of
Brand in the Road Machine Market: An Impassive Study on the Heavy Machinery Production
Company (HEPCO)." Research Journal of Humanities and Social Sciences 10, no. 3 (2019):
813-821.

Aggrawal, A. (2014). INTERNATIONAL CONFERENCE ON Management of Globalized

Business: Emerging Perspectives. Lulu. com.

Shastri, S. (2018). Microfinance: A study of the Effectiveness of Fund Flows among Women
in Rural Gujarat.

Borikar, H. “AN EMPIRICAL STUDY TO DETERMINE FACTORS AT WORKPLACE

STRESS IN FINANCIAL SECTOR (WITH SPECIAL REFERENCE TO AHMEDABAD
DISTRICT) (Doctoral dissertation, Indus University).

BORIKAR, H. (2021). AN EMPIRICAL STUDY T AT WORKPLACE STRES (WITH

SPECIAL REFER DIST (Doctoral dissertation, GUJARAT TECHNOLOGICAL
UNIVERSITY AHMEDABAD).

Bhatt, V., & Mehta, B. (2020). Factors Influencing Overall Service Quality of Online
Banking: A Comparative Study of Indian Public and Private Sector Banks. Journal of Applied
Business & Economics, 22(4).

Banker, A., Jadhav, D., & Bhatt, V. (2020). A CLASSIFICATION OF E-BANKING USERS
BASED ON IMPACT OF SERVICE QUALITY PARAMETERS IN BANKING
INDUSTRY. PalArch's Journal of Archaeology of Egypt/Egyptology, 17(12), 1746-1758.

HiralBorikar, M., & Bhatt, V. (2020). A Classification of Senior Personnel with Respect to
Psychographic and Demographic Aspect of Workplace Stress in Financial Services.

Prajapati, K., & Bhatt, V. (2019). A Study of an Influencing Factor in the Expansion of Brand
in the Road Machine Market: An Impassive Study on the Heavy Machinery Production
Company (HEPCO). Research Journal of Humanities and Social Sciences, 10(3), 813-821.

Bhatt, H. R. D. V. A study on customers’ perceptions towards E service quality dimensions

and their satisfaction of online shopping platforms.

Sheth, J. D., & Bhatt, V. (2019). A Study on Factors Affecting Distribution Channels of
Indian Mutual Fund Industry with Special Reference to No-Entry Load Regime-Post 2009.
Research Journal of Humanities and Social Sciences, 10(2), 691-696.

11
1
Nagvadia, M. J., & Bhatt, V. A STUDY ON FACTORS INFLUENCING CONSUMER'S
ONLINE BUYING BEHAVIOUR.

Joshi, D., & Bhatt, V. A STUDY ON FACTORS INFLUENCING CONSUMER’S

PREFERENCE WHILE MAKING PURCHASE DECISION OF FIRST OWN CAR IN
AHMEDABAD CITY.

Bhatt, H. R. D. V. (2020). A study on impact of E service quality dimensions of online

shopping platforms on overall service experience. Alochana Chakra Journal, 1066-1088.

Bhatt, V. G., & Trivedi, T. M. A STUDY ON JOB SATISFACTION OF BANK

EMPLOYEES WITH RESPECT TO READINESS TO CHANGE IN WORK
ENVIRONMENT IN MAJOR CITIES OF GUJARAT.

Prajapati, K., & Bhatt, V. (2019). A Study on Perception of Brand Extension by FMCG
Consumer in Ahmedabad. Research Journal of Humanities and Social Sciences, 10(3), 747-
753.

Bhatt, V. G., & Trivedi, T. M. A STUDY ON RELATIONSHIP AMONGST

DESIGNATION AND CHANGE READINESS WITHIN EMPLOYEES OF BANKING
SECTOR IN GUJARAT.

Bhatt, V. (2021). An Empirical Study On Analyzing A User’s Intention Towards Using

Mobile Wallets; Measuring The Mediating Effect Of Perceived Attitude And Perceived Trust.
Turkish Journal of Computer and Mathematics Education (TURCOMAT), 12(10), 5332-
5353.

Bhatt, V., &Saiyed, M. (2015). AN EMPIRICAL STUDY ON BRAND SWITCHING

BEHAVIOR OF CONSUMERS IN THE FMCG INDUSTRY WRT AHMEDABAD.
Frontiers
in Mathematics, 2015.

Bhatt, V., &Prajapati, M. F. (2018). An Empirical study on Consumer’s Securitization and

faith on online payment in Gujarat. Int. J. Rev. and Res. Social Sci, 6(3), 291-296.

Bhatt, V., & Joshi, D. (2019). An empirical study on demographic factors influencing
consumers’ usage of social media. Research Journal of Humanities and Social Sciences,
10(2), 709-714.

Vora, H., Jadhav, D., & Bhatt, V. (2020). AN EMPIRICAL STUDY ON EVALUATING
AND VALIDATE THE FACTORS AFFECTING TO SATISFACTION OF HIGHER
11
2
EDUCATION. PalArch's Journal of Archaeology of Egypt/Egyptology, 17(12), 1759-1771.

11
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 Bhatt, V. G., & Trivedi, T. M. A STUDY ON RELATIONSHIP AMONGST
DESIGNATION AND CHANGE READINESS WITHIN EMPLOYEES OF BANKING
SECTOR IN GUJARAT.

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