An evaluation of Indian stressed banks: A dupont analysis

AbstractPurposeThe main arena of this work is to use DuPont analysis to study common causes and determine the personal motivation behind the merger of 10 Indian public sector banks into four major banks.Design/methodology/approachThe banks under analysis are Punjab National Bank (PNB), Oriental Bank of OBC), as well as United Bank, United Bank of India, Andhra Bank, Corporate Bank, Canara Bank, Syndicate Bank, Bank of India and Allahabad Bank. To this end, we used the annual data as of March 31, 2015 and the year ended March 31, 2019. The DuPont model divides ROE into three parts: net profit margin, total asset turnover rate and equity multiplier. The application of the DuPont model gives further bits of knowledge into the efficiency and financial performance of banks.FindingsIt turns out that there was no single common component of the DuPont model responsible for the merger of Indian Public Sector Banks. In this study, it was found that the reasons behind each bank's merger had no common ground.Originality/valueThe analysis presented in the current paper contributes to existing literature by steering a DuPont Analysis and determining whether a common factor is ultimately responsible for the merger of all ten public sector banks considered in the study. The findings provide useful insights to the policymakers and analysts into the study of Indian Stressed Banks.