Relatıonshıp Between Lıquıdıty and Growth Performance of Commercıal Banks In Indıa: An Empırıcal Analysıs

Abstract

This paper investigates the determinants of liquidity management of Private Sector Banks in India and its impact on banks’ growth performance. The growth factors such as increase in investments and deposits have been considered as dependent variables which are taken to be measured by the independent variables like Investment Deposit Ratio, Credit Deposit Ratio, Cash Deposit Ratio, Investment to Total Assets, Demand and Savings Bank Deposit to Total Deposits, Term Loans to Total Advances, Net NPA to Net Advances. The study includes all the Private Sector Banks registered in India for a period of 14 years with 294 sample units. The statistical tools such as descriptive statistics, correlation matrix, regression models and econometric models have been used. The study finds that determinants of liquidity have significant influence on growth performance (change in deposit and investment) of Indian commercial banks in private sector.