IMPACT OF CAPITAL STRUCTURE ON PROFITABILITY OF PUBLIC SECTOR BANKS

Abstract

This research study delves into the intricate interplay between capital structure decisions and the resulting profitability of public sector banks in India. The study focuses on three prominent banks: State Bank of India, Bank of Baroda, and Bank of India. The research is conducted over a comprehensive five-year period, spanning from the financial year 2018-19 through 2022-23, allowing for an in-depth analysis of the banks' financial data. The research objectives are threefold: Firstly, the study seeks to assess the profitability of the selected public sector banks, comprehensively analysing their financial performance. Secondly, the study aims to dissect the capital structure of these banks, evaluating the mix of equity and debt financing they employ. Lastly, the study aims to uncover the impact of capital structure decisions on the profitability of these banks, exploring whether and how the choices made in this regard influence their financial outcomes. The findings of this research endeavour hold the potential to offer valuable insights to stakeholders, policymakers, and the banking industry at large. By illuminating the connection between capital structure and profitability, the study's conclusions could inform strategic decision-making, risk management practices, and approaches to financial sustainability in the context of public sector banking.