Impact of working capital management on profitability: A comparative study of public sector banks and private sector banks listed in NSE Bank Nifty, India

Stephen, Sony; Jose, Ann

Abstract

Our study mainly aims to study the impact of working capital management on the profitability of both Public Sector banks and private sector banks listed in NSE Bank Nifty. Bank Nifty represents 12 highly liquid and high market capitalised stock that are traded in the National Stock Exchange through which investors get accurate information about the capital market performance of the Indian banking sector. The period of study spans from 2019 to 2021. Globally, the COVID-19 plague's effects have harmed many organisations' financial standing. We are dividing the period of study into three namely, pre pandemic period, during pandemic and post pandemic period to essentially understand whether pandemic plays any role on working capital management and profitability of public and private sector banks. For our study all the private sector banks and all public sector banks listed in Banknifty has been considered
The independent variable of our study is Working capital management which is measured using deposit to total assets ratio (DTTA), cash to assets ratio (CTA), Asset Turnover ratio(AT),Net Loans to Total Assets ratio (NLTTA), Loan to Deposit ratio(LTD), Cash conversion Cycle (CCC). The dependent variable of our study is profitability which is measured using Return on Assets (ROA) and Return on Capital Employed (ROCE). Pearson Correlation analysis will be used to assess the relationship between working capital management and profitability. The effect of working capital management on profitability will be made using Regression analysis.
The findings revealed that there is a positive relationship between working capital management and profitability.
Our study has filled the present gap of studying the impact of working capital management on profitability of both public and private sector banks listed in NSE Nifty Bank by considering 3 periods Pre, During and Post Covid 19 as none of the previous literature has investigated this fact. Also, this study will be important for academicians, regulatory bodies, policy makers, investors and analysts.
Keywords: Working Capital Management, Profitability, Public Sector Banks, private Sector Banks, Bank Nifty

Citation

Stephen, S., & Jose, A. (2023, February). Impact of working capital management on profitability: A comparative study of public sector banks and private sector banks listed in NSE Bank Nifty, India. Paper presented at The 5th International Conference on Organisation and Management ICOM 2023, Abu Dhabi

• Presentation Conference Type: Conference Paper (unpublished)
• Conference Name: The 5th International Conference on Organisation and Management ICOM 2023
• Conference Location: Abu Dhabi
• Start Date: Feb 22, 2023
• End Date: Feb 24, 2023
• Deposit Date: Mar 30, 2023
• Publicly Available Date: Apr 12, 2023
• Series Title: Social And Energy Finance
• Keywords: Working Capital Management, Profitability, Public Sector Banks, private Sector Banks, Bank Nifty
• Public URL: https://uwe-repository.worktribe.com/output/10595046
• Related Public URLs: https://www.adu.ac.ae/home/2023/02/22/default-calendar/the-5th-international-conference-on-organization-and-management-(icom-2023)