This study investigates the financial soundness of commercial banks in India during the period 2005–2024, which was marked by extreme economic turmoil owing to Black Swan events, such as the Global Financial Crisis of 2008, demonetisation in 2016, and the worldwide lockdown due to the COVID-19 pandemic. Bank-specific ratio indicators and macroeconomic variables have been used in the paper, and long-run industry effects have been captured using a dynamic two-step Generalised Method of Moments (GMM) estimation. The results point to a strong endurance in bank profitability, driven by internal balance-sheet fundamentals. Asset quality has a consistently negative impact across all ownership groups, while managerial efficiency emerges as the most positive. Public sector banks are primarily stabilised by capital and liquidity buffers, reflecting their greater reliance on regulatory safety nets. The sector’s post-2008 crisis resilience is highlighted by the relative insignificance of macroeconomic factors and the impact of the demonetisation shock. COVID-19 had a neutral or positive effect, mainly due to the extensive support measures implemented by the Reserve Bank of India (RBI). In contrast, the 2008 crisis had a negative impact, primarily because of the limited effectiveness of the policies in place. Robustness checks using alternative profit indicators confirm the consistency of the results. Therefore, this study provides empirical evidence for the long-term stability and financial resilience of the Indian banking system.
AcharyaV. V., & KulkarniN. (2011). What saved the Indian banking system: State ownership or state guarantees?World Economy, 35(1), 19–31.
2.
AlamM. S., RabbaniM. R., TausifM. R., & AbeyJ. (2021). Banks’ performance and economic growth in India: A panel cointegration analysis. Economies, 9(1), 38.
3.
AlarussiA. S., & AlhaderiS. M. (2018). Factors affecting profitability in Malaysia. Journal of Economic Studies, 45(3), 442–458.
4.
AlbulescuC. T. (2015). Banks’ profitability and financial soundness indicators: A macro-level investigation in emerging countries. Procedia Economics and Finance, 23, 203–209.
5.
AlexiouC., & SofoklisV. (2009). Determinants of bank profitability: Evidence from the Greek banking sector. Economic Annals, 54(182), 93–118.
6.
AlhassanA. L., & AsareN. (2016). Intellectual capital and bank productivity in emerging markets: Evidence from Ghana. Management Decision, 54(3), 589–609.
7.
AliM., & PuahC. H. (2018). The internal determinants of bank profitability and stability: An insight from banking sector of Pakistan. Management Research Review, 42(1), 49–67.
8.
Al-JafariM. K., & AlchamiM. (2014). Determinants of bank profitability: Evidence from Syria. Journal of Applied Finance and Banking, 4(1), 17.
9.
AllenF., & GaleD. (2000). Financial contagion. Journal of Political Economy, 108(1), 1–33.
10.
Al-TamimiH. A. (2010). Factors influencing performance of the UAE Islamic and conventional national banks. Global Journal of Business Research, 4(2), 1–9.
11.
AmeurI. G. B., & MhiriS. M. (2013). Explanatory factors of bank performance evidence from Tunisia. International Journal, 2(1), 1–11.
12.
ArellanoM., & BondS. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies, 58(2), 277–297.
13.
ArellanoM., & BoverO. (1995). Another look at the instrumental variable estimation of error-components models,Journal of Econometrics, 68(1), 29–52.
14.
AthanasoglouP. P., BrissimisS. N., & DelisM. D. (2008). Bank-specific, industry-specific and macroeconomic determinants of bank profitability. Journal of International Financial Markets, Institutions and Money, 18(2), 121–136.
15.
BansalR., SinghA., KumarS., & GuptaR. (2018). Evaluating factors of profitability for Indian banking sector: A panel regression. Asian Journal of Accounting Research, 3(2), 236–254.
16.
BapatD. (2012). Efficiency for Indian public sector and private sector banks in India: Assessment of impact of global financial crisis. International Journal of Business Performance Management, 13(3/4), 330.
17.
BhatiaA., & KumarJ. (2025). Assessing the impact of COVID-19 on financial performance of public and private banks in India. Journal of Quantitative Economics, 23(2), 601–620.
18.
BlundellR., & BondS. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115–143.
19.
BourkeP. (1989). Concentration and other determinants of bank profitability in Europe, North America and Australia. Journal of Banking & Finance, 13(1), 65–79.
20.
BouzgarrouH., JouidaS., & LouhichiW. (2018). Bank profitability during and before the financial crisis: Domestic versus foreign banks. Research in International Business and Finance, 44, 26–39.
21.
BrunnermeierM. K., DongG. N., & PaliaD. (2020). Banks’ noninterest income and systemic risk. The Review of Corporate Finance Studies, 9(2), 229–255. https://doi.org/10.1093/rcfs/cfaa006
22.
CarrascoB., & MukhopadhyayH. (2011). India’s monetary policy accommodation during the Global Crisis—was it effective? In DastidarK. Ghosh, MukhopadhyayH., & SinhaU. B. (Eds), Dimensions of economic theory and policy (pp. 317–336). Oxford University Press eBooks.
23.
ÇekreziA., ShaniniE., SaadaouiM., & MekkaouiS. (2015). Factors affecting performance of commercial banks in Albania. The European Proceedings of Social & Behavioral Sciences eISSN, 1330–2357.
24.
ChandaA., & CookC. J. (2022). Was India’s demonetization redistributive? Insights from satellites and surveys. Journal of Macroeconomics, 73, 103438.
25.
CrouzetN., GuptaA., & MezzanottiF. (2023). Shocks and technology adoption: Evidence from electronic payment systems. Journal of Political Economy, 131(11), 3003–3065.
26.
Demirgüç-KuntA., PedrazaA., & Ruiz-OrtegaC. (2021). Banking sector performance during the COVID-19 crisis. Journal of Banking & Finance, 133, 106305.
27.
DervizA., & PodpieraJ. (2008). Predicting bank CAMELS and S&P ratings: The case of the Czech Republic. Emerging Markets Finance and Trade, 44(1), 117–130.
28.
DestaT. S. (2016). Financial performance of ‘The best African banks’: A comparative analysis through CAMEL rating. Journal of Accounting and Management, 6(1), 1–20.
29.
DharmapalaD., & KhannaV. (2019). Stock market reactions to India’s 2016 demonetisation. Journal of Empirical Legal Studies, 16(2), 281–317.
30.
DietrichA., & WanzenriedG. (2014). The determinants of commercial banking profitability in low-, middle-, and high-income countries. The Quarterly Review of Economics and Finance, 54(3), 337–354.
31.
García-HerreroA., Gavilá, S., & SantabárbaraD. (2009). What explains the low profitability of Chinese banks?Journal of Banking & Finance, 33(11), 2080–2092.
32.
GhoshI., & JanaR. K. (2023). A granular machine learning framework for forecasting high-frequency financial market variables during the recent Black Swan event. Technological Forecasting and Social Change, 194, 122719.
33.
GodlewskiC. (2003). Bank’s default modelisation: An application to banks from emerging market economies. Journal of Social Science Research Network, 4(3), 150–155.
34.
González-HermosilloM. B., & ItoT. (1997). The Bank of Canada’s monetary policy framework: Have recent changes enhanced central bank credibility? [IMF Working Paper No. WP/97/171]. International Monetary Fund.
35.
GulS., IrshadF., & ZamanK. (2011). Factors affecting bank profitability in Pakistan. Romanian Economic Journal, 14(39), 61–87.
36.
GulatiR., CharlesV., HassanM. K., & KumarS. (2023). COVID-19 crisis and the efficiency of Indian banks: Have they weathered the storm?Socio-Economic Planning Sciences, 88, 101661.
37.
GulatiR., & KumarS. (2016). Assessing the impact of the global financial crisis on the profit efficiency of Indian banks. Economic Modelling, 58, 167–181. https://doi.org/10.1016/j.econmod.2016.05.029
38.
HaldaneA. G., & MayR. M. (2011). Systemic risk in banking ecosystems. Nature, 469(7330), 351–355.
39.
HasanovF. J., BayramliN., & Al-MusehelN. (2018). Bank-specific and macroeconomic determinants of bank profitability: Evidence from an oil-dependent economy. International Journal of Financial Studies, 6(3), 78.
40.
HauH., LangfieldS., & Marques-IbanezD. (2013). Bank ratings: What determines their quality?Economic Policy, 28(74), 289–333.
41.
IslamM., & AshrafuzzamanM. (2015). A comparative study of Islamic and conventional banking in Bangladesh: Camel analysis. Journal of Business and Technology, 10(1), 73–91.
42.
IslamM. S., & NishiyamaS. I. (2016). The determinants of bank net interest margins: A panel evidence from South Asian countries. Research in International Business and Finance, 37, 501–514.
43.
JaffarM., & ManarviI. (2011). Performance comparison of Islamic and Conventional banks in Pakistan. Global Journal of Management and Business Research, 11(1), 60–65.
44.
KaurH. V. (2010). Analysis of banks in India—A CAMEL approach. Global Business Review, 11(2), 257–280.
45.
KhanA. A. (2022). Evaluating the decisive factors of profitability of the banking sector using a panel regression model. Journal of Commerce & Accounting Research, 11(4), 42–53.
46.
KhatiK. S., KushwahaS., & MukherjeeD. (2023). The impact of global financial crisis on the efficiency of Indian banks: Evaluation with data envelopment analysis. India Studies in Business and Economics. In ChatterjeeT. Banerjee, GhoseA., & RoyP. (Eds), Risks and resilience of emerging economies (pp. 151–172). Springer.
47.
KhrawishH. A., & Al-Sa’diN. M. (2011). The impact of e-banking on bank profitability: Evidence from Jordan. Middle Eastern Finance and Economics, 13(1), 142–158.
48.
KnaupM., & WagnerW. (2012). Forward-looking tail risk exposures at US bank holding companies. Journal of Financial Services Research, 42(1), 35–54.
49.
KohlscheenE., Murcia PabónA., & ContrerasJ. (2018). Determinants of bank profitability in emerging markets. BIS Working Paper 686. Bank for International Settlements.
50.
KojuL., KojuR., & WangS. (2018). Does banking management affect credit risk? Evidence from the Indian banking system. International Journal of Financial Studies, 6(3), 1–11.
51.
KosmidouK. (2008). The determinants of banks’ profits in Greece during the period of EU financial integration. Managerial Finance, 34(3), 146–159.
52.
KosmidouK., TannaS., & PasiourasF. (2005). Determinants of profitability of domestic UK commercial banks: Panel evidence from the period 1995–2002. InMoney Macro and Finance (MMF) Research Group Conference, 45, 1–27.
53.
KouserR., & SabaI. (2012). Gauging the financial performance of banking sector using CAMEL model: Comparison of conventional, mixed and pure Islamic banks in Pakistan. International Research Journal of Finance and Economics, 82(1), 67–88.
54.
KulshresthaP., & SrivastavaA. (2022). Use of camel rating framework: A comparative performance analysis of selected commercial banks in India. Copernican Journal of Finance & Accounting, 11(1), 67–87.
55.
KumarR., & VashishtP. (2009). The global economic crisis: Impact on India and policy responses. [ADBI Working Paper No. 164]. Asian Development Bank Institute.
56.
LiemC. (2018). Enterprise risk management in banking industry. Firm Journal of Management Studies, 3(1), 1–15.
57.
MajumdarS., AgarwalS., & GhoshS. (2023). Excess cash or excess headache? Demonetisation and bank behaviour in India. Studies in Economics and Finance, 41(4), 751–774.
58.
MajumderM. T. H., & LiX. (2018). Bank risk and performance in an emerging market setting: The case of Bangladesh. Journal of Economics, Finance and Administrative Science, 23(46), 199–229.
59.
MeherB. K. (2017). Impact of demonetisation on NPA position of Indian banks. International Journal of Advanced Scientific Research and Engineering Trends, 2(1), 1–8.
60.
MiccoA., PanizzaU., & YanezM. (2007). Bank ownership and performance. Does politics matter?Journal of Banking & Finance, 31(1), 219–241.
61.
MirzaeiA., & MirzaeiZ. (2011). Bank-specific and macroeconomic determinants of profitability in Middle Eastern banking. Iranian Economic Review, 15(29), 101–128.
62.
MishraP. K. (2020). COVID-19, Black Swan events and the future of disaster risk management in India. Progress in Disaster Science, 8, 100137.
63.
Moudud-Ul-HuqS., BiswasT., ChakrabortyB., & AminM. A. (2020). Effect of ownership structure on Bank diversification and risk-taking behavior in Bangladesh. The Journal of Asian Finance, Economics and Business, 7(11), 647–656.
64.
NguyenT. H. (2020). Impact of bank capital adequacy on bank profitability under Basel II Accord: Evidence from Vietnam. Journal of Economic Development, 45(1), 31–46.
65.
OyadeyiO. O., ArogundadeS., & BiyaseM. (2024). How did African stock markets react to the Russia–Ukraine crisis ‘black-swan’ event? Empirical insights from event study. Humanities and Social Sciences Communications, 11(1), 1–13.
66.
PalamalaiS., & SaminathanY. (2016). A CAMEL model analysis of public, private and foreign sector banks in India. Pacific Business Review International, 8(9), 45–57.
67.
PariharS. S., SiddiquiM. H., & MehrotraS. (2021). Impact assessment of COVID-19 on digital payment: An Indian perspective. International Journal of Business Process Integration and Management, 10(3/4), 259.
68.
PasiourasF., & KosmidouK. (2007). Factors influencing the profitability of domestic and foreign commercial banks in the European Union. Research in International Business and Finance, 21(2), 222–237.
69.
PennathurA. K., SubrahmanyamV., & VishwasraoS. (2012). Income diversification and risk: Does ownership matter? An empirical examination of Indian banks. Journal of Banking & Finance, 36(8), 2203–2215.
70.
PetriaN., CapraruB., & IhnatovI. (2015). Determinants of banks’ profitability: Evidence from EU 27 banking systems. Procedia Economics and Finance, 20, 518–524.
71.
PhadnisC., JoshiS., & SharmaD. (2021). A study of the effect of Black Swan events on stock markets – And developing a model for predicting and responding to them. Australasian Accounting, Business and Finance Journal, 15(1), 113–140.
72.
PiyushP., & GoyelS. (2018). Measurement of correlations of different banks and trend analysis in NPA of Indian banks. International Journal of Management, 8(6), 81–88.
73.
QiY. (2023). The trigger and application of Black Swan events: A case study of Silicon Valley bank failures. Advances in Economics, Management and Political Sciences, 50, 7–15.
74.
RahmanM. M., HamidM. K., & KhanM. A. M. (2015). Determinants of bank profitability: Empirical evidence from Bangladesh. International Journal of Business and Management, 10(8), 135.
75.
RamadanI. Z., KilaniQ. A., & KaddumiT. A. (2011). Determinants of bank profitability: Evidence from Jordan. International Journal of Academic Research, 3(4), 180–191.
76.
RBI. (2022). Report on trend and progress of banking in India 2021–22. (IV: Operations and Performance of Commercial Banks). Reserve Bank of India.
77.
ReddyS. K. (2012). Relative performance of commercial banks in India using CAMEL approach. International Journal of Multidisciplinary Research, 2(3), 38–58.
78.
RobinI., SalimR., & BlochH. (2018). Financial performance of commercial banks in the post-reform era: Further evidence from Bangladesh. Economic Analysis and Policy, 58, 43–54.
79.
SainiP., & SindhuJ. (2014). Role of commercial banks in the economic development of India. International Journal of Engineering and Management Research, 4(1), 27–31.
80.
SalikeN., & AoB. (2017). Determinants of bank’s profitability: Role of poor asset quality in Asia. China Finance Review International, 8(2), 216–231.
81.
SarkarJ., & SarkarS. (2018). Bank ownership, board characteristics and performance: Evidence from commercial banks in India. International Journal of Financial Studies, 6(1), 1–30.
82.
StaikourasC. K., & WoodG. E. (2004). The determinants of European bank profitability. International Business & Economics Research Journal (IBER), 3(6), 57–68.
83.
SufianF. (2012). Determinants of bank profitability in developing economies: Empirical evidence from the South Asian banking sectors. Contemporary South Asia, 20(3), 375–399.
84.
SufianF., & HabibullahM. S. (2009). Determinants of bank profitability in a developing economy: Empirical evidence from Bangladesh. Journal of Business Economics and Management, 10(3), 207–217.
85.
SunP. H., MohamadS., & AriffM. (2017). Determinants driving bank performance: A comparison of two types of banks in the OIC. Pacific-Basin Finance Journal, 42, 193–203.
86.
TalebN. N. (2007). The Black Swan: The impact of the highly improbable. Random House.
87.
TanY., & FlorosC. (2012). Bank profitability and GDP growth in China: A note. Journal of Chinese Economic and Business Studies, 10(3), 267–273.
88.
WoodallB., Amekudzi-KennedyA., InchausteM. O., SundararajanS., MedinaA., SmithS., & PoppK. (2024). Institutional resilience and disaster governance: How countries respond to Black Swan events. Progress in Disaster Science, 22, 100329.
89.
WooldridgeJ. M. (2006). Cluster-sample methods in applied econometrics: An extended analysis. Michigan State University Mimeo.
90.
YükselS., MukhtarovS., MammadovE., & ÖzsarıM. (2018). Determinants of profitability in the banking sector: An analysis of post-Soviet countries. Economies, 6(3), 1–15.
