Low interest rates along with stiff competition among banks put pressure on interest margins of banks and hence negatively affect bank profitability.This is an example of which of the following factors affect the profitability of the banks in India?a)Micro Economic Factorsb)Macro Economic factorsc)Industry specific Factorsd)Other Bank specific factorsCorrect answer is option 'B'. Can you explain this answer?

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a)
Micro Economic Factors
b)
Macro Economic factors
c)
Industry specific Factors
d)
Other Bank specific factors

Correct answer is option 'B'. Can you explain this answer?

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Low interest rates along with stiff competition among banks put pressu...

Profitability of banks in India is affected by both internal and external factors.

Broadly the profitability of banks is affected by three major factors as follows:

Macro-economic factors-The profitability of banks respond positively to GDP growth and negatively, to inflation growth rate. Inflation has a strong effect on profitability of banks and banks' profits are not significantly affected by the real GDP fluctuations. Low interest rates along with stiff competition among banks put pressure on interest margins of banks and hence negatively affect bank profitability.
Industry Specific Factors-NPAs have the most adverse impact on the profitability of banks. They reduce the profitability due to increase in operating costs and decline in their interest margins.
Other Bank Specific Factors-There exists a positive relationship between deposits and profitability as more deposits a bank collects, higher will be the availability of funds for generating loans and for other profitable uses such as investments.

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Low interest rates along with stiff competition among banks put pressure on interest margins of banks and hence negatively affect bank profitability.This is an example of which of the following factors affect the profitability of the banks in India?a)Micro Economic Factorsb)Macro Economic factorsc)Industry specific Factorsd)Other Bank specific factorsCorrect answer is option 'B'. Can you explain this answer?

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Low interest rates along with stiff competition among banks put pressure on interest margins of banks and hence negatively affect bank profitability.This is an example of which of the following factors affect the profitability of the banks in India?a)Micro Economic Factorsb)Macro Economic factorsc)Industry specific Factorsd)Other Bank specific factorsCorrect answer is option 'B'. Can you explain this answer? for Banking Exams 2024 is part of Banking Exams preparation. The Question and answers have been prepared according to the Banking Exams exam syllabus. Information about Low interest rates along with stiff competition among banks put pressure on interest margins of banks and hence negatively affect bank profitability.This is an example of which of the following factors affect the profitability of the banks in India?a)Micro Economic Factorsb)Macro Economic factorsc)Industry specific Factorsd)Other Bank specific factorsCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for Banking Exams 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Low interest rates along with stiff competition among banks put pressure on interest margins of banks and hence negatively affect bank profitability.This is an example of which of the following factors affect the profitability of the banks in India?a)Micro Economic Factorsb)Macro Economic factorsc)Industry specific Factorsd)Other Bank specific factorsCorrect answer is option 'B'. Can you explain this answer?.

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