Abstract
This paper examines the impact of bank specific as well as macroeconomic variables on the performance of the Indian banking industry. Our results show that among macroeconomic variables GDP of a country is having positive relation and is of paramount importance in affecting profitability of bank operating in that country. On the other hand, the asset quality, as measured by the NPA/TA ratio and expense management measured by OEXP/TA affects the performance of bank adversely. In addition, bank size has not proved to be an important determinant of bank profitability. Finally, with regard to macroeconomic variables, the foreign banks operating in India were less affected as compared to the domestic banks.
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