Impact of priority sector lending on financial profitability: segment wise panel data analysis of Indian Banks / Rajesh Desai

Desai, Rajesh (2021) Impact of priority sector lending on financial profitability: segment wise panel data analysis of Indian Banks / Rajesh Desai. Management & Accounting Review (MAR), 20 (1). pp. 19-38. ISSN (eISSN):2550-1895

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Abstract

A sustainable and financially stable banking system is a prerequisite to achieve comprehensive growth as well as economic and social well-being of residents of any country. This research focused on analyzing profitability of Indian banks and how it is affected by lending in the priority sector. Priority sector lending (PSL) mainly includes deployment of credit to weaker and neglected segments of an economy. The study adopted a distinctive measure to represent total PSL by classifying it into four sub-segments i.e., agriculture, industrial, service, and personal credit. Applying panel least square regression with fixed and random effects model, the study concluded that agricultural lending has a significant negative impact on bank profitability whereas the service sector lending adds positive value towards financial profitability of banks. Industrial and personal credit were found to be insignificant factors affecting profitability. The study will be beneficial to banking professionals and policy makers to determine sensitive and risky sectors of lending and develop appropriate approaches to deal with them.

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Item Type: Article
Creators:
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Desai, Rajesh
UNSPECIFIED
Subjects: H Social Sciences > HJ Public Finance > Expenditures, Public
H Social Sciences > HJ Public Finance > Local finance. Municipal finance. Including county, borough, commune, etc.
Divisions: Universiti Teknologi MARA, Shah Alam > Accounting Research Institute (ARI)
Journal or Publication Title: Management & Accounting Review (MAR)
UiTM Journal Collections: UiTM Journal > Management & Accounting Review (MAR)
ISSN: (eISSN):2550-1895
Volume: 20
Number: 1
Page Range: pp. 19-38
Official URL: https://mar.uitm.edu.my/
Item ID: 47752
Uncontrolled Keywords: Priority Sector Lending, Banks, Profitability
URI: https://ir.uitm.edu.my/id/eprint/47752

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47752

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