FINANCIAL PERFORMANCE AND EFFICIENCY OF COMMERCIAL BANKS IN SOUTH ASIA

Abstract

The objective of the paper is to make a comparative analysis of the financial performance and efficiency of Commercial banks in two prominent South Asian Countries such as India and Sri Lanka using time series data from 2008 to 2017. The study is based on secondary data collected from database of World Bank, Asian Development Bank, Central banks of two South Asian Countries and published reports on banking sector. The efficiency of commercial banks has been analysed using   returns efficiency which   has been calculated using Rate of Return on Commercial Bank Assets (% per annum), Rate of Return on Commercial Bank Equity (% per annum).Different aspects of financial soundness of the banking sector i.e. Capital Adequacy, Risk-Weighted Capital Adequacy Ratios (% of risk-weighted assets), Assets Quality, Nonperforming Assets (% of commercial bank advances), Profitability and Liquidity are also discussed to facilitate comparison between the Scheduled Commercial Banks of India and the Licensed Commercial Banks of Sri Lanka. Trend analysis has been used with a purpose of finding out the growth pattern of the performance related ratios in the study. On the basis of review and objectives of this study appropriate statistical and mathematical tools like standard deviation, coefficient of correlation, regression, ratios, percentage of growth rate have been used to analyze the data. The overall efficiency of commercial banks have improved in these two  South Asian Countries after 2008 and both Sri Lanka &  India give  good scenarios  in bank efficiency due to higher return .