IMPACT OF MONETARY POLICY ON BANKS’ PROFITABILITY
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Date
2024
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Publisher
Department of Management Studies, NITS
Abstract
This study looks at how India's banks' profitability metrics (ROA and ROE) are affected by
monetary policy factors (CRR, SLR, Repo Rate, Bank Rate) between 2013 and 2023. Based on
secondary sources such as RBI reports, bank websites, and published literature, data from 10
out of the 34 public and private sector banks that were chosen were analysed. The results of the
regression analysis show a significant correlation (explanatory power, or R-squared) of 83.2%
for ROA and 80.5% for ROE between monetary policy and bank profitability. Important result
indicates that whereas Repo Rate and CRR have negative effects on both ROA and ROE, Bank
Rate has a beneficial influence. SLR has very little of impact. The study highlights the intricate
relationships between monetary policy and bank profitability, highlighting the necessity for
customized policy interventions and more research into variables that may have an impact in
addition to these.