Ownership effects on bank performance: A Panel study of Indian banks

Abstract

In this paper, we use Panel Regression techniques to analyse the effects of ownership on bank performance in the context of an emerging economy, India. The literature points to mixed results in this context. We find that with the entire sample of public sector banks, old private sector banks and new private sector banks, ownership does not seem to have any effect on the Return On Assets but, public sector banks do seem to have higher Net Interest Margin and Operating Cost Ratio. However, when the State Bank of India and its seven associates are dropped from the sample, we find that new private sector banks start showing a higher return on assets.