Relationship between Earnings Capacity and Liquidity: A study of Selected Private and Public Sector banks of India

Abstract

Economic development of a country depends significantly on banking services. Banks play a crucial role in the capital formation of an economy. Hence, an evaluation of financial performance of the banking sector is an effective measure and indicator to check the soundness of economic activities of an economy. The performance of banking sector is perceived as the replica of economic activities of the economy. The development of the banking industry is considered as a good reflection of the development of the economy. In this paper I have made an earnest attempt to evaluate the performance of selected public and private sector banks using CAMEL approach and including its two parameters calls for earning and liquidity. The data required for the study are mainly secondary in nature. The data relating to the period of 2010-15 have been collected for the purpose. For this purpose, researcher has collected secondary data of SBI, Dena Bank, BOB, Punjab national Bank, Union bank of India from public sector banks and Axis bank, Federal Bank, ICICI Bank, Yes Bank, HDFC Bank from private sector banks.