A Study on Risk and Return Analysis and Data Envelopment Analysis of Public and Private Sectors Banks: A Five -Year Study (2018-2022)

Abstract

Risk and returns are like two faces of the same coin, if an investor wants to gain higher returns, he must also accept the fact that this would also increase the amount of risk involved. Most of the times, individual decision process is influenced by risk and return analysis. The study is focused on analysing the performance of those nationalized banks listed in the NSE with respect to return, risk and beta for the period 1st January 2017 to 31st December 2017. The term risk is a situation in which the possibility of the consequence can be predicted, but uncertainty is the situation where the possibility cannot be predicted. Risk and uncertainty are part and parcel of investment The possibility of risk is a loss for the investors. The methodology adopted includes analysis of the performance of banking sector considering Bank Nifty Index as benchmark. Risk and return of banking stocks as well as Data Envelopment analysis method is used for analysing the efficiency of banks. The entire study is based on secondary data collected from the NSE. The data collected was based on the monthly prices of the bank stocks listed in Bank Nifty. The reason for selecting monthly prices is to measure the shortterm variations in the banking stocks due to various other internal and external factors. The findings of the study revealed that if the investors are ready to take high risk for more returns, the investors are suggested to invest in stocks like Bank of India and Punjab National Bank in which risk and return are high. The investors who prefer low risk and return are suggested to invest in Axis Bank stock.