Business model and financial performance: evidence from the Indian banking industry

摘要

Traditionally banking has operated in a relatively stable environment for decades. However, today the business is facing dramatic competition in a new dynamic environment. So, banks make strategic choices to improve their financial performance. The purpose of the study is to identify different banking business models using hierarchical cluster analysis. Further, to understand the impact of the strategic choices which banks make on their financial performance, we employ panel data regression and quantile regression techniques. The sample period for the study is 2003-2016 and the sample set includes 50 Indian commercial banks which aggregate to more than 90% of the total assets of the banking sector during the sample period. The cluster analysis groups the observations into four distinct clusters. The results of the quantile regression indicate that there is differentiated impact across quantiles.