CHAPTER

IIIRESEARCHMETHODOLOGY
3.1 RESEARCHDESIGN
A research design is “The arrangement of conditions for collections and analysis
of data in a manner that aims to combine relevance to the research purpose with economy in
procedure. In fact, the research design is the conceptual structure within which research is
conducted; it constitutes the blueprint for the collection, measurement and analysis of data”.
The researcher has taken descriptive studies as the research design.

3.2 DATACOLLECTION:
Ten leading public sector banks (Indian bank, Vijaya bank, Punjab & Sind bank,
Bank of Maharashtra, United Bank of India, Dena Bank, Bank of Baroda, Syndicate bank,
Andhra bank and Corporation bank) and nine private sector bank (HDFC bank, ICICI bank,
Yes bank, Kotak Mahindra bank, IndusInd bank, Federal bank, RBL bank, City Union bank,
KarurVysya bank) and one cooperative bank (Tamilnadu State Apex Cooperative Bank)
ofIndiahavebeenselectedforthisstudy.Thedataispurelybasedonsecondaryinformationandthesa
me has been collected from annual report sand banks websites.

3.3 PERIODOFSTUDY:
This study covers the period of five years from 2012-2013 to 2017-2018.

3.4 VARIABLES:
Thefollowingfivevariableshavebeenselectedtoanalysistheperformanceofselectedbanks
3.4.1 Operational Efficiency Ratio:
Operational efficiency can be defined as the ratio between an
outputgainedfromthebusinessandaninputtorunabusinessoperation.Whenimprovingoperational
efficiency,theoutputtoinputratioimproves. The ratios used under Operational efficiency are

1) Credit deposit ratio(OR1)

Credit deposit ratio= Advances

Total deposits
 2) Cash deposit ratio(OR2)

Capital to deposit ratio= Capital

Total Deposit

3) Profit per employee ratio (OR3)

Profit per employee= Net profit

No. of Employees
4) Return on equity(OR 4)
Return on Equity= Net profit
Total Equity
5) Business per employee ratio(OR5)
Business per employee= Total Business
No. of Employees

3.4.2 Profitability Efficiency Ratio:

Profitabilityratiosdepicthowmuchprofitsacompanyisgenerating,whereas efficiency ratios
measure how efficient a company utilizes its resources to generate a profit. Profitability ratios
measure a company's ability to generate profits within a specified context. The ratios used under
Profitability Efficiency are

1) Profit Margin (PR1):

Profit Margin= Net profit
Total income

2) Net Interest Margin(PR2):

Net Interest Margin= Interest Margin
Total Assets
3) Return on Asset (PR3):

Return on Asset= Net Profit

Total Assets
 3.4.3 Managerial Efficiency Ratio:
Managerialefficiencyistheabilityofmanagingtoperformthetaskbyoptimalutiliz
ation of resources and minimum wastage of resources. Managerial efficiency involves two
words managerial and efficiency. The ratios used under Managerial Efficiency are

1) Interest income to Total income:

Interest income to Total income=Interest Income

Total income
2) Non-Interest income to Total Income:

Non-Interest income to Total Income=Non-Interest income

Total income

3.4.4 Liquidity Efficiency Ratio:

Liquidity ratios are measurements used to examine the ability of an organization to pay off its short-
termobligations.Liquidityratiosarecommonlyusedbyprospectivecreditorsandlenderstodecidewhethert
oextendcreditordebt,respectively,tocompanies.TheratiosusedunderLiquidityEfficiencyRatioare

1) Cash to Deposit ratio:

Cash to Deposit ratio= Cash

Deposit

2) Cash to Asset ratio:

Cash to Asset ratio= Cash

Total Assets
3) Working capital to Asset:
Working Capital to Asset=Net Working capital
Total Assets
4) Current Ratio:
Current ratio= Current Assets
Current liabilities
 3.4.5 Capital Adequacy:
The capital adequacy ratio (CAR) is a measurement of a bank's
available capital expressed as a percentage of a bank's risk-weighted credit exposures. The
capitaladequacyratioisusedtoprotectdepositorsandpromotethestabilityandefficiencyoffinan
cialsystems around the world. Two types of capital are measured: tier-1 capital, which can
absorb losses without a bank being required to cease trading, and tier-2 capital, which can
absorb losses in the event of a winding-up and so provides a lesser degree of protection to
depositors.
 Tier I Capital
 Tier II Capital
3.5 SATISITICALTOOLS
The following are the statistical tools used for analysis

 Descriptive statistics: Descriptive statistics are brief descriptive coefficients that

summarize a given data set, which can be either a representation of the entire or a sample of a
population. Descriptive statistics are broken down into measures of central tendency and
measures of variability (spread). Measures of central tendency include the mean, median, and
mode, while measures of variability include the standard deviation, variance, the minimum and
maximum variables, and the kurtosis and skewness.

 One-way ANOVA: The one-way analysis of variance (ANOVA) is used to

determine whether there are any statistically significant differences between the means of
two or more independent (unrelated) groups (although you tend to only see it used when
there is a minimum of three, rather than two groups).

 Multi-Dimensional Scaling Technique (MDS): MDS is used to

translate"informationaboutthepairwise'distances'amongasetofnobjectsorindividuals"intoaconf
igurationofnpointsmappedintoanabstractCartesianspace. More technically, MDS refers to a
set of related ordination techniques used in information visualization, in particular to display
the information contained in a distance matrix. It is a form of non-linear dimensionality
reduction.