EXPLORING THE COMPETITION-PROFITABILITY RELATIONSHIP IN INDIAN BANKING INDUSTRY.

The main objective of financial sector reform in India in the early 1990s was to invite more competition. Consequently, with the entry of private and foreign banks, the competitive banking environment witnessed widespread changes like new technology, new products and services, new business practices and obviously new regulatory norms to tackle the new developments. This research evaluates the impact of competition in the banking industry on the profitability of Indian banks. Using annual data of twelve public sector and nineteen private sector banks for the period 2013 to 2022, the researchers investigate the effect of competition on banking profitability. Competition is measured by Lerner index, whereas financial performance is measured by Net Interest Margin (NIM). The results of the study indicate that there is a strong effect of competition of banking profitability during the study period. [ABSTRACT FROM AUTHOR]