Indian Banking Sector : Measurement and Analysis of Market

Value Added An Empirical Study in the Select Indian Banks

Najmus Sahar Sayed

Oriental College of Commerce and Management, Mumbai
&
Gazia Sayed
IES Management College and Research Centre, Mumbai

Abstract : The banking industry in India has a huge canvas of history, which
covers the traditional banking practices right from nationalization to privatization
of banks and now to multinational banks in India. Therefore, Banking in India has
been through a long journey. Banking industry in India has also achieved a new
height with the changing times. The use of technology has brought a revolution
in the working style of the banks. However, with the changing dynamics, banking
business has brought a new kind of risk exposure. Majority of the banks are
successful in keeping with the confidence of the shareholders as well as other
stakeholders but not all the banks are able to live up to the expectation of the
shareholders. In order to grow and gain the faith of shareholders, organizations
should try to improve the long-term financial performance and create wealth for
the shareholders.

JEL CODES

C02, C35, C88, G17, G21

Keywords : MVA, Net Income Margin, Capital Adequacy Ratio (CAR), Dividend
Pay/Out Ratio, PAT, ROA, ROE, ROCE, RONW, Dividend Yield and NPA

INTRODUCTION

Banks play a vital role in the economic development of a country; their
performance undertakes or determines the pace of development of economy.
Mostly they engage in the money transactions including accepting deposits from
the customers and lending them to the needy ones in the form of loans. The last
2 decade witnessed many positive developments in the Indian banking sector,
especially after arrivals of Private Banks. Some banks established an outstanding
track record of innovation, growth and value creation. The recent global financial
crisis has triggered fall of many economies, contributed by financial losses and
large nonperformance assets in banking sector. The banking sector in India
emerged largely unscathed from the global financial crisis of 2007-08, but

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faced a slowdown in the momentum of growth due to the weakening of trade,
finance and confidence channels. Macro-economic conditions in fiscal 2011-12
continued to be challenging and the continuing uncertainties in the international
financial markets had an impact on emerging market economies, including India.
Sovereign risk concerns, particularly in the Euro zone, affected financial markets
and a fear of defaults by some European countries along with a growth slowdown
led to increased risk aversion. The year 2011-12 saw banks overseas reduce their
debt exposure to emerging markets, causing a drop in fund flows to emerging
markets, affecting India. The banking sector, which remains the largest financial
intermediary, saw a slowdown in deposit growth in fiscal 2011-12, primarily
due to liquidity pressures and lower financial savings. The turmoil in the Indian
banking industry is still not showing any sign of easing soon, faced with various
headwinds like asset quality deterioration and possible waning margins, arising
out of savings interest rate increase, are likely to keep the sectors growth under
check for some more time.

The financial performance of banking sector always puts an impact on the

performance of the economy. Hence, the stability of banking sector is vital for the
growth of any economy. The growth of banks mainly depends on its conventional
business services like deposits and loans. In order to grow and gain the faith
of shareholders, organizations should try to improve the long-term financial
performance and create wealth for the shareholders. Wealth creation is considered
as imperative. The key to creating wealth is adding value. All financial success,
especially business success, is based on adding value. Adding value is the way that
all fortunes are made.

Value Based Management

Value Based Management (VBM) has been referred to as the fastest and
hottest ticket to shareholders wealth. Value Based Management is a complete
financial management and incentive compensation system that guides decision
making at every level and includes techniques like Economic Value Added (EVA),
Return on Operating Invested Capital (ROIC) and Market Value Added (MVA).
Companies use VBM as a guide in financial planning, monitoring and controlling
operations. Shareholder value creation is represented by the difference between the
market value of the firms equity and the equity capital invested by shareholders.

Market Value Added

Market Value Added (MVA) is the difference between the current market
value of a firm and the capital contributed by investors. The market value added
measurement shows the net difference between a companys market value and

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the cost of its invested capital. According to Stern Stewart (2006), if the total
market value of a company is more than the amount of capital invested in it, the
company has managed to create shareholder value. If the market value is less
than capital invested, the company has destroyed shareholder value. Book value
of equity refers to all equity equivalent items like reserves, retained earnings
and provisions. In other words, in this context, all the items that are not debt
(interest bearing or noninterest bearing) are classified as equity. According to
Stewart, Market value added tells us how much value the company has added to,
or subtracted from, its shareholders investment. Successful companies add their
MVA and thus increase the value of capital invested in the company. Unsuccessful
companies decrease or deteriorate the value of the capital originally invested in
the company. Whether a company succeeds in creating MVA or not, depends on its
rate of return. If a companys rate of return exceeds its cost of capital, the company
will sell on the stock market with premium compared to the original capital. On
the other hand, companies that have rate of return lesser than their cost of capital
sell with discount compared to the original capital invested in company. Whether
a company has positive or negative MVA depends on the rate of return compared
to the cost of capital.

Computation

As per the book on Financial Management by M Y Khan and P K Jain,

Market Value Added is calculated as:

Market Value Added = Companys total Market Value Capital Invested

With the simplifying assumption that market and book value of debt are
equal, this is the same as

Market Value Added = Market Value of equity Book value of equity

For example, if bondholders and shareholders have contributed $1,000,000

to form Company XYZ and during its existence since inception and it is currently
listed on the stock exchange with a stock market value of $2,000,000, it can be
said that the MVA of the company is $1,000,000. Or, MVA ($1,000,000) + Capital
invested ($1,000,000) = Market Value ($2,000,000)

NEED OF THE STUDY

The equity shareholders are real owners of company form of business

organizations. They all invest their money in equity shares of a company with
the primary motive of achieving good capital appreciation and regular and

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stable return (i.e., dividends). The investors objectives are purely based on the
profitability and financial performance of the company. So, investors before taking
their investment decisions, they consider several factors which influence the
corporate performance. For measuring the corporate financial performance, there
are accounting profitability measures and shareholders value based measures.
Accounting profitability measures include Dividend Pay/Out Ratio, Net Sales
Growth, Dividend Yield, PAT, CPM, ROA, ROE, ROCE and RONW, Shareholders
valued based measures include EVA and MVA. Maximizing the shareholder value
is considered as one of the fundamental goals of all businesses. To help corporates
to generate value for shareholders, value based management systems like MVA
have been developed. In United States, there are number of companies which have
adopted MVA as a tool of measuring the financial performance of an enterprise.
But in India this concept is at very nasal stage.

Although conditions have improved since the beginning of the last financial
year, the global environment is likely to continue to be an area of concern. Though,
the Indian financial sector (including banks, non-banking financial companies, or
NBFCs, and housing finance companies, or HFCs) reported a compounded annual
growth rate (CAGR) of 19% over the last three years and their credit portfolio
stood at close to Rs.49 trillion (around 62% of 2010-11 GDP) as on March 31, 2011
(ICRA Research report, June 2011), Indian banks still face several challenges, such
as increase in interest rates on saving deposits, possible deregulation of interest
rates on saving deposits, a tighter monetary policy, a large government deficit,
increased stress in some sectors (such as, State utilities, airlines, and microfinance),
restructured loan accounts, unamortized pension/gratuity liabilities, increasing
infrastructure loans, and implementation of Basel III.

In the context of challenges faced by Indian banking industry and realizing

the significance of MVA, an attempt is made to study the Market Value Added by
the Indian banks.

LITERATURE REVIEW

Many researchers have studied MVA from different views and in different
contexts. The following are very interesting and useful for our research. Stewart
(1991) was the first person who studied the relationship between EVA and
shareholder wealth with market data of 618 U.S companies and presented the
results in his book The quest for value. He stated that EVA and MVA correspond
with each other quite well among selected U.S companies. The study provided the
first empirical evidence of EVAs potential as a proxy for MVA and reported a R2
of 0.97 between changes in EVA and changes in MVA for 25 groupings of firms
over the period 1987-88.

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 Milunovich and Tsuei (1996) reviewed the correlations between MVA
and several conventional performance measures in the US computer technology
industry for the period from 1990 to 1995. The study indicated EVA to have strong
correlation with MVA than the other measures of financial performance.

KPMG-BS Study (1998) assessed top companies on EVA, sales, PAT (Profit
after Tax), and MVA criteria. The survey has used the BSE 1000 list of companies
using a composite index comprising sales, profitability and compounded annual
growth rate of those companies covering the period 1996-97. Sixty companies have
been found able to create positive shareholder value whereas 38 companies have
been found to destroy it. Accounting numbers have failed to capture shareholder
value creation or destruction as per the findings of the study. 24 companies have
destroyed shareholder value by reporting negative MVA.

Ashok Thampy (2000) applied the concept of economic value added to

the banking and Development Financial Institutions sector in India. The results of
the study revealed that most banks in the public and private sector, as well as the
development financial institutions in India are not earning positive EVA.

Madhu Malik (2004) examined the relationship between shareholder wealth

and certain financial variables like EPS, RNOW and ROCE. By using correlation
analysis, it was found that there was positive and high correlation between EVA and
RONW, ROCE. There was a positive but low correlation between EVA and EPS.
By using co efficient of determination (r2), EVA was compared with Traditional
performance measures and it was found that not a single traditional performance
measure explains to the fullest extent variation in shareholder wealth.

Singh (2005) examined an appropriate way of evaluating banks

performance and also found out which Indian banks have been able to create
(or destroy) shareholders wealth since 1998-1999 to 2002-2003. This study is
based on 28 Indian private and public sector banks that are listed on the Bombay
Stock Exchange (BSE). The study suggested that the relationship between EVA
and MVA is statistically significant. The study showed impressive performance
in terms of EVA by banks such as State Bank of Bikaner and Jaipur, Jammu and
Kashmir Bank, Global Trust Bank and Indusind Bank.

Wet JHvH de (2005) endeavoured to analyze the performance of companies

listed on the JSE Securities Exchange of South Africa for the period from 1994
to 2004, by using market value added (MVA) as a proxy for shareholder value.
The findings did not support the purported superiority of EVA and revealed that
on a year-on-year basis, EVA did not show the strongest correlation with MVA.
However, among other performance indicators chosen for the study, the changes

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in the standardised cash flow from operations (CFL/Beginning Invested Capital)
explained the biggest percentage of changes in standardised MVA (38%). ROA
came second best (15%) and standardised EVA (8%) third. Thus, the results
suggested stronger relationships between MVA and cash flow from operations.

Ramachandra Reddy and Yuvaraja Reddy (2007) examined the effect of

selected variables on MVA. This study was conducted with 10 cement companies
in India and the objective of this study was to examine the effect of select variables
on MVA. For this purpose, Multiple Regression technique has been used to test the
effect of select variables on MVA. The study found that none of the factors is found
to have impact on MVA and EPS is found to have negative and significant impact
on MVA. The study concluded that the performance of select cement companies
in terms of profitability cannot be increased unless the improved problems like
modernization, cost reduction, control taxes etc., are solved.

Dr. (Mrs.) D. Kamalaveni and Dr. (Mrs.) S. Kalaiselvi (2010) in their

paper, Market Value Added : A study in the select Indian Software Companies
examined the effect of selected variables on MVA in the Indian software industry.
The researchers selected 102 software companies for which data were available
for minimum eight years. The study concluded that MVA is very important to
know the wealth creation by a company. The MVA analysis showed that many
companies have destroyed the wealth of shareholders. The regression analysis
concluded that MVA is influenced by the Market Price.

Dr. N. Sakthivel (2011) in the paper Value Creation in Indian

Pharmaceutical Industry: A Regression Analysis examined the value creation
in Indian Pharmaceutical Industry from 1997-98 to 2006-07 by using regression
analysis. The study strongly concluded that there is significant difference in mean
value creation across low, moderate and high total productivity for pharmaceutical
companies. In regression analysis, it is found that total productivity does not have
explanatory power on value creation in short-term, but it has some influence on
value creation in the long-run in respect of pharmaceutical companies

All the above studies provide us a solid base and give us idea regarding
value based management and its components. While there has been enough
research on EVA and profitabilitys ratio, there is a dearth of literature and research
on MVA as a tool for evaluating the creation of shareholders wealth. Thus taking
into consideration the importance of MVA and the growth of banking industry,
the research will help to understand that whether Indian banks are adding or
destroying the shareholders wealth. This research will also help in formulating a
regression model, which will help in understanding the factors on which MVA is
dependent on.

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RESEARCH OBJECTIVES

The main objective of the study is to compute Market Value Added

performance in the Indian banks. The other objectives are to study the impact
of MVA on Value Creation in Indian banks and to examine the relationship
between MVA and other traditional measures of corporate performance like Yield
on Advances (YOA), Yield on investments (YOI), Net Income Margin (NIM),
Capital Adequacy Ratio (CAR), Dividend Pay/Out Ratio (DP/O), Profit After
Tax Margin (PATM), Cash Profit Margin (CPM), Return on Asset (ROA), Return
on Equity (ROE), Return On Capital Employed (ROCE), Return on Net Worth
(RONW), Dividend Yield (DY) and Net NPAs to Net Advances (NNTNA).

RESEARCH DESIGN

The study is done on the data available from the annual reports of the
companies. Tabular analysis techniques employed are: Ratios, Percentages and
Regression Analysis. MVA is computed for the 37 banks listed on Bombay Stock
Exchange. The regression analysis is done through SPSS software.

Data Collection

This study is based on the secondary data. For the purpose of present study
the data is collected from the annual reports of the selected banks, Ace Equity
software, research journals, business magazines, various financial dailies, reports,
websites etc.

Sample Selection

The analysis of MVA is done for the 37 banks, of which 15 are private
sector banks and 22 are public sector banks. The data used in the study relate to
the banks which are listed on the Bombay Stock Exchange 2012.

Period of study

The data collected for computing MVA and the regression model pertains
to a period of 10 years i.e. 2003 to 2012.

Selection of variables

In the present study, a number of key financial variables have been identified
for the purpose of analysis like, Yield on Advances, Yield on investments, Net
Income Margin, CAR, Dividend Pay/Out Ratio, PATM, Cash Profit Margin, ROA,
ROE, ROCE, RONW, Dividend Yield and Net NPAs to Net Advances.

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Data Analysis

To understand Market Value Added by the Indian banks average MVA is

calculated. To analyze the impact of financial and economic variables on value
creation, a multivariate technique, multiple linear regression models has been
applied.

FINDINGS AND ANALYSIS

MVA is one of the external indicators which give the utmost satisfaction to
the investors. From the investors perspective, increase of the share price is always
desirable. The most reliable measure of a managements long term success in
adding value is known as Market Value Added (MVA). MVA is the best internal
performance indicator as it indicates the market assessment of the effectiveness
with which companies managers have used the scare resources under their control.
Hence, it turns out to be very significant and important to analyze and identify the
internal indicators that relate well with MVA.

The following are the observations from the Table 1:

It could be observed out of 37 banks, 22 banks are public banks whereas

15 banks are private sector banks.

It is also evinced that out of 37 banks, 24 banks or 64.86% of banks have

shown a positive MVA trend in the last 10 years. It means that these banks are
successfully adding value to the shareholders whereas 13 banks or 35.14% of
banks have shown a negative MVA. It means that these banks have destroyed the
value of the shareholders.

`It is also observed that out of 15 private banks, 13 banks or 86.67% of

banks have shown a positive MVA. However only 2 banks or 13.33 banks have
shown a negative MVA. The bank with the highest average MVA is HDFC Bank
Ltd. It has an average MVA of Rs.37,165.56 crores. Karnataka Bank Ltd. had
the least MVA which is Rs.(87.57) crores. It is a negative MVA, stating that the
Karnataka Bank has deteriorated the shareholders wealth.

From the 22 public banks; 11 or 50.00% of banks have shown a positive

MVA whereas 11 banks or 50.00% of banks have shown a negative MVA. State
Bank of India have a highest MVA of Rs.35,855.94 crores whereas Central Bank
of India had the least MVA of Rs.(2,293.36) crores.

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 The overall analysis implies that 50% of public banks have added value
to shareholders wealth whereas 86.67% of private banks have added value to
shareholders wealth. But 50% of the public banks have ruined the shareholders
wealth, whereas 13.33% of private banks have destroyed the shareholders wealth.
It means 64.86% of banks have added to shareholders wealth whereas 35.14% of
banks have deteriorated the shareholders wealth.

REGRESSION ANALYSIS

Regression analysis is a statistical tool for the investigation of relationships

between variables. The most commonly performed statistical procedure is multiple
regression analysis. Multiple regressions are a technique that allows additional
factors to enter the analysis separately so that the effect of each can be estimated.
It is valuable for quantifying the impact of various simultaneous influences upon
a single dependent variable.

Multiple Regression Analysis has been carried out to explore the extend of
relationship existed among dependent variable and independent variables incase
of selected banks and also to find out whether a particular independent variable
emerges as the most explanatory variable. MVA is taken as the dependent variable
and different ratios like YieldonAdvances, Yieldoninvestments, Dividend Yield,
ROCE, RONW, PATM, CPM, Dividend Pay/Out Ratio, NIM, ROA, ROE, CAR
and NetNPAstoNetAdvancesare taken as the independent variables.

The following are the observations from the Table 2:

1. The results of Table 2.1 show a positive auto correlation as per the
result of Durbin Waston model. It is also evident from the table that the values
of correlation co-efficient are coming down and that of the adjusted R-Square
are going up. In the 6th model the estimated standard error is also minimum.
This shows that NetNPAtoNet Advances, ROCE, RONW, ROA,NIM,
Dividendpayout,Dividendyield and PATM are the best determinants of MVA. The
Durbin-Watson model testifies the positive auto-correlation in the variables as the
value is less than 2.

2. The results of Table 2.2 present the result of ANOVA analysis. The
F-statistics shows that the value of the residual is minimum in the 6th model. The
P value of model 6th is 0.000, which is less than 0.05. It indicates that the model
is significant.

3. Table 2.3 is used to find the most explanatory independent variable or set
of variables of MVA. Tested with t-statistics, the Table 2.3 brings out that RONW
is found significant if tested at 7.6 per cent level, ROCE is found significant if
Great Lakes Herald Vol 9 , No 1 , March 2015 Page27
tested at 6.3 per cent level, NetNPAtoNetAdvances is found significant if tested
at 4.1 per cent level. Whereas NIM and ROA are quite significant if tested at 1
percent level of significant but PATM, Dividend Yield and Dividend Payout Ratio
are observed to be significant even at 0.5 percent level of significant.

4. The overall observation shows that out of the eight important variables
NIM, ROA, PATM, Dividend Yield and Dividend Payout Ratio are the very
important variables. Moreover, among these very important variables, PATM,
Dividend Yield and Dividend Payout Ratio are the most important variables
wherein PATM stands on second position and Dividend Yield and Dividend
Payout Ratio are the best one.

5. As PATM, Dividend Yield and Dividend Payout Ratio are the most
important variables to determine the Market Value Added, it is concluded that
wealth creation in banking industry is strongly influenced by the amount of
dividends paid by the company or by the ability to pay the dividend.

Regression Model

Using the multiple regression model the Market Value Added for the Indian
Banks will be as follows:

Y = a + (b1x1) + (b2x2) + (b3x3) + (b4x4)+ (b5x5)+ (b6x6)+ (b7x7)+ (b8x8)

= -39376.15 + (-2935.26*x1) + (357.33*x2) + (4196.52*x3)+ (9046.77*x4)+

(-50402.64*x5)+ (4586.39*x6)+ (-4839.40*x7)+ (1114.57*x8)

where: x1is RONW, x2is ROCE, x3is Net NPA to Net Advances, x4is NIM,x5is
ROA,x6is PATM,x7is Dividend Yield,x8is Dividend Payout.

CONCLUSION

An attempt has been made in this study to compute MVA for the Indian
banks and also to find out the relationship between MVA and other independent
variables like Yield on Advances, Yield on investments, Net Income Margin,
CAR, Dividend Pay/Out Ratio, PATM, Cash Profit Margin, ROA, ROE, ROCE,
RONW, Dividend Yield and Net NPAs to Net Advances. MVA analysis shows that
in most of the years under study, wealth reduction has been observed mainly in
case of public sector banks. Multiple regression analysis using backward method
has been adopted in order to explore the extent of relationship between dependent
and independent variables. The Durbin-Watson model exhibits a positive auto-
correlation among the variables. Three most important variables namely, PATM,
Dividend Yield and Dividend Pay/Out Ratio remained after the least predictors
Great Lakes Herald Vol 9 , No 1 , March 2015 Page28
got eliminated. Dividend Yield and Dividend Pay/Out Ratio stands in high merit
as per the overall analysis. This implies that wealth creation is strongly influenced
by the returns provided to the shareholders. If a company fails to give returns i.e.
dividends to the shareholders, it causes wealth deterioration. Finally, it can be
concluded that MVA, the best indicator of wealth is influenced by Dividend paid
by the Indian banks to the shareholders.

SUMMARY

The Indian banking system is different from other global peers because
of the countrys unique geographic, social, and economic characteristics.
Undoubtedly the banking industry went through a tough phase with bad loans
expanding, the health of the economy deteriorating amidst subdued credit growth.
While, the Indian banking system has managed to remain relatively unaffected
from global economic conditions until now, it will be difficult to project that the
sector will be unscathed in the long run too, despite the support of a robust financial
system. The economic recovery in Europe and the US is sluggish, which is a major
concern for the rest of the world, including India. Besides, the rise in borrowings
by the Indian government might drain funds from the private credit market. Banks
will need to increase their capital to achieve growth and comply with Basel III
norms. In a scenario where the cost of borrowing is high and government support
is limited due to tighter economic conditions, banks will have to be very effective
in operations in order to provide high returns to shareholders.

Currently, there are many challenges before Indian Banks such as

improving capital adequacy requirement, managing non-performing assets,
enhancing branch sales & services, improving organization design, using
innovative technology through new channels and working on lean operations.
Apart from this, frequent changes in policy rates to maintain economic stability,
various regulatory requirements, etc. are additional key concerns.Despite these
concerns, the Indian banking industry is expected to grow with a consistent pace,
looking at the huge growth potential of Indian economy, high population base
of India, mobile banking - offering banking operations through mobile phones,
financial inclusion, rising disposable income, etc. will drive the growth in the
Indian banking industry in the long run.

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 REFERENCES AND BIBLIOGRAPHY

ACE Equity v2 - 4.9.0 software, Accord Fintech Pvt. Ltd. Retrieved

January 10, 2013 fromACE Equity http://www.aceanalyzer.com

Ashok Thampy and Rajiv Baheti (2000), Economic Value Added in

Banks and Development Financial Institutions, Working Papers, IIMB

De Wet, JHvH 2005, EVA versus traditional accounting measures of

performance as drivers of shareholder value - a comparative analysis, Meditari :
Research Journal of the School of Accounting Sciences, 13, (2), 1-16

Dr. (Mrs.) D. Kamalaveni, Dr. (Mrs.) S. Kalaiselvi, (2010), Market Value

Added : A study in the select Indian Software Companies, International Journal
of Research in Commerce and Management, August 2010, 1, (4) 227-224

Dr. N. Sakthivel, (2011), Value Creation In Indian Pharmaceutical

Industry: A Regression Analysis, Researchers World - Journal of Arts Science &
Commerce, January 2011, 2, (1) 215-232

G. Bennett Stewart, The Quest for Value : A Guide for Senior Managers,
HarperCollins, 1991

KPMG-BS, (1998), Corporate India: An Economic Value Scoreboard,

The Strategy, January-March 1998, 22-25

Malik, Madhu, (2004), EVA and Traditional Performance Measures:

Some Empirical Evidence, The Indian Journal of Commerce, 57, (2), April-June
2004, 32-37

Milunovich, S., &Tsuei, A. (1996), EVA in the computer industry, Journal

of Applied Corporate Finance, 9(1), 104115

M Y Khan and P K Jain, Financial Management, 5th Edition, Tata McGraw

Hill, 01-May-2007

Ramachandra Reddy, B. and Yuvaraja Reddy, B, (2007), Financial

Performance through Market Value Added (MVA) Approach, The Management
Accountant, January 2007, 56-59

Singh, Prakash (2005), EVA in Indian Banking: Better Information

content, More Shareholder Value, ABHIGYAN, Vol. XXIII, No. 3, October-
December 2005, 40-49

Stern Stewart and Company, (2006) Why EVA works, http://eva.com/

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 X. TABLES
Table: 1 Calculation of Market Value Added
Company Name MVA 2012 MVA 2011 MVA 2010 MVA 2009 MVA 2008 MVA 2007 MVA 2006 MVA 2005 MVA 2004 MVA 2003 Average MVA
Axis Bank Ltd. 24540.49 38627.44 31324.28 4665.96 19171.80 10401.93 7045.52 4205.64 2260.39 5.28 14224.87
City Union Bank Ltd. 734.70 807.92 315.21 -269.56 325.94 41.15 -17.35 -39.12 -38.33 -75.37 178.52

Great Lakes Herald

Development Credit Bank Ltd. 277.80 352.45 101.50 -209.04 859.26 709.65 -139.31 -174.05 -285.50 -219.97 127.28
Dhanlakshmi Bank Ltd. -147.62 120.37 412.02 -102.94 29.89 40.32 -34.70 -25.96 -44.47 -64.76 18.22
Federal Bank Ltd. 1585.69 2062.13 -118.86 -1957.80 -219.89 349.60 483.28 297.93 168.40 -328.37 232.21
HDFC Bank Ltd. 92114.86 83620.79 66936.40 26118.07 35286.13 23889.74 18921.78 12344.94 8081.70 4341.18 37165.56
ICICI Bank Ltd. 41867.29 73069.27 54589.79 -12507.56 38861.24 52053.18 29875.31 16052.97 9878.48 923.27 30466.32
IndusInd Bank Ltd. 10475.35 8457.59 4838.81 -282.11 1406.99 284.81 494.08 623.80 85.95 -415.60 2596.97
ING Vysya Bank Ltd. 1466.55 1366.64 1129.57 -264.38 2051.84 592.42 387.36 -374.62 448.17 -43.42 676.01
Jammu & Kashmir Bank Ltd. 353.93 760.70 281.66 -1115.93 996.78 1112.02 388.81 98.94 794.90 -692.76 297.91
Karnataka Bank Ltd. -797.27 -406.04 -227.71 -774.36 1046.66 836.95 103.29 -120.27 -166.16 -370.81 -87.57
KarurVysya Bank Ltd. 1288.54 1655.98 873.99 -268.64 621.62 208.45 12.04 -27.99 -69.95 -291.13 400.29
Kotak Mahindra Bank Ltd. 32197.95 26830.59 21537.62 5875.18 18070.70 13982.13 7733.80 3442.23 1799.41 393.80 13186.34
Lakshmi Vilas Bank Ltd. -49.69 144.05 18.16 -143.99 60.05 -24.64 -106.94 -35.49 -69.20 -116.88 -32.46
South Indian Bank Ltd. 763.25 886.54 547.69 -705.87 116.23 -7.76 -206.80 -150.11 -135.11 -192.94 91.51
Allahabad Bank -333.62 3343.14 481.21 -3243.15 -918.79 -345.83 476.91 1614.79 -226.97 -482.25 36.54
Andhra Bank -803.60 1954.45 832.81 -1466.92 344.56 532.15 1024.86 2483.00 571.42 -51.43 542.13
Bank of Baroda 5325.64 17910.72 8179.35 -4335.85 -702.40 -803.65 544.60 766.90 1986.54 -858.58 2701.33
Bank of India 987.58 10156.02 5093.98 -236.03 4455.38 2432.71 1607.15 745.33 -964.56 -1509.98 2276.76
Bank of Maharashtra -1131.41 -666.01 -266.31 -1171.67 389.37 -32.28 -224.97 -99.10 -1404.97 -948.13 -555.55
Canara Bank 357.88 9796.98 4285.24 -3237.71 937.57 -128.41 3924.04 2224.36 797.72 -1104.93 1785.27

Vol 9 , No 1 , March 2015

Central Bank of India -3178.69 -3250.62 192.47 -3031.08 -386.04 -3303.98 -2934.33 -2741.65 -2434.15 -1865.52 -2293.36
Corporation Bank -1983.39 2315.15 1124.49 -2316.78 -168.51 378.46 2100.13 1943.16 1250.45 -477.56 416.56
Dena Bank -1140.98 16.40 -142.92 -1022.47 -108.02 -236.40 -21.53 -77.61 -333.09 -267.33 -333.40
IDBI Bank Ltd -4189.33 1353.37 108.79 -4153.79 -345.87 -618.59 -704.75 650.58 626.46 -122.46 -739.56
Indian Bank 664.18 1663.46 508.33 -2328.25 2005.41 255.21 -2267.69 -1878.38 -1474.89 -1049.25 -390.19
Indian Overseas Bank -2413.10 1568.30 -494.26 -2759.85 2623.00 1739.05 2226.87 1709.84 1123.24 -599.97 472.31
Oriental Bank of Commerce -3725.32 1078.97 718.05 -3698.92 -1350.12 -901.44 738.20 2658.09 3118.65 -876.12 -224.00
Punjab National Bank 5042.09 18618.04 15723.40 -184.11 5239.45 4729.63 5783.08 4552.04 4167.68 -1001.30 6267.00
State Bank of Bikaner & Jaipur -1345.63 -252.81 -149.15 -1065.72 785.79 20.29 676.52 -117.68 -293.84 -643.45 -238.57
State Bank of India 56632.68 110775.33 66042.89 9765.45 51929.98 20957.66 23304.28 10503.07 11646.65 -2998.58 35855.94
State Bank of Mysore -1055.42 -43.44 219.80 -479.15 1322.19 710.24 1342.41 -20.43 61.71 -276.52 178.14
State Bank of Travancore -960.66 259.70 222.42 -1188.15 669.86 -95.26 744.32 -117.41 -149.31 -515.30 -112.98
Syndicate Bank -1351.09 334.28 -731.32 -2089.62 52.20 149.45 2026.23 536.98 165.26 -585.51 -149.31
UCO Bank -2884.71 -247.73 -1657.60 -2176.61 469.11 -500.61 135.17 633.71 265.60 -909.70 -687.34
Union Bank of India -169.59 7027.25 5989.62 383.49 1498.86 514.89 2062.38 2062.20 -177.64 -914.89 1827.66
Vijaya Bank Ltd -2080.74 -772.56 -1110.77 -1807.98 46.01 -8.88 658.00 1251.36 1385.83 -250.49 -269.0211

Source: Authors computations

Page31
Table: 2.1 MVA and other independent variables : Durbin Watson
Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate Durbin-Watson

1 .858 a
.736 .581 6346.28000
2 .858b .736 .599 6208.29747
3 .855c .732 .609 6129.36273
1.481
4 .852d .725 .615 6079.62588
5 .848e .718 .621 6034.62300
6 .842f .709 .622 6021.48284

a. Predictors: (Constant), Average_Net_NPAs_to_Net_Advances, Yield_on_

investments, ROCE, Yield_on_advances, Average_Dividend_payout, Average_
RONW, Average_CAR, Average_ROA, Average_NIM, Average_Dividend_yield,
Averag_ROE, Average_CPM, Average_PATM

b. Predictors: (Constant), Average_Net_NPAs_to_Net_Advances, Yield_on_

investments, ROCE, Yield_on_advances, Average_Dividend_payout, Average_
RONW, Average_ROA, Average_NIM, Average_Dividend_yield, Averag_ROE,
Average_CPM, Average_PATM

c. Predictors: (Constant), Average_Net_NPAs_to_Net_Advances, Yield_on_

investments, ROCE, Yield_on_advances, Average_Dividend_payout, Average_
RONW, Average_ROA, Average_NIM, Average_Dividend_yield, Average_CPM,
Average_PATM

d. Predictors: (Constant), Average_Net_NPAs_to_Net_Advances, Yield_on_

investments, ROCE, Average_Dividend_payout, Average_RONW, Average_
ROA, Average_NIM, Average_Dividend_yield, Average_CPM, Average_PATM

e. Predictors: (Constant), Average_Net_NPAs_to_Net_Advances, ROCE,

Average_Dividend_payout, Average_RONW, Average_ROA, Average_NIM,
Average_Dividend_yield, Average_CPM, Average_PATM

f. Predictors: (Constant), Average_Net_NPAs_to_Net_Advances, ROCE,

Average_Dividend_payout, Average_RONW, Average_ROA, Average_NIM,
Average_Dividend_yield, Average_PATM

g. Dependent Variable: MVA

Great Lakes Herald Vol 9 , No 1 , March 2015 Page32

Table : 2.2 MVA and Other independent variables : ANOVA

Model Sum of Squares df Mean Square F Sig.

6 Regression 2381991347.052 8 297748918.382 8.212 .000f
Residual 978972901.615 27 36258255.615
Total 3360964248.667 35

a. Predictors: (Constant), Average_Net_NPAs_to_Net_Advances, Yield_on_

investments, ROCE, Yield_on_advances, Average_Dividend_payout, Average_
RONW, Average_CAR, Average_ROA, Average_NIM, Average_Dividend_yield,
Averag_ROE, Average_CPM, Average_PATM

b. Predictors: (Constant), Average_Net_NPAs_to_Net_Advances, Yield_on_

investments, ROCE, Yield_on_advances, Average_Dividend_payout, Average_
RONW, Average_ROA, Average_NIM, Average_Dividend_yield, Averag_ROE,
Average_CPM, Average_PATM

c. Predictors: (Constant), Average_Net_NPAs_to_Net_Advances, Yield_on_

investments, ROCE, Yield_on_advances, Average_Dividend_payout, Average_
RONW, Average_ROA, Average_NIM, Average_Dividend_yield, Average_CPM,
Average_PATM

d. Predictors: (Constant), Average_Net_NPAs_to_Net_Advances, Yield_on_

investments, ROCE, Average_Dividend_payout, Average_RONW, Average_
ROA, Average_NIM, Average_Dividend_yield, Average_CPM, Average_PATM

e. Predictors: (Constant), Average_Net_NPAs_to_Net_Advances, ROCE,

Average_Dividend_payout, Average_RONW, Average_ROA, Average_NIM,
Average_Dividend_yield, Average_CPM, Average_PATM

f. Predictors: (Constant), Average_Net_NPAs_to_Net_Advances, ROCE,

Average_Dividend_payout, Average_RONW, Average_ROA, Average_NIM,
Average_Dividend_yield, Average_PATM

g. Dependent Variable: MVA

Great Lakes Herald Vol 9 , No 1 , March 2015 Page33

Table : 2.3 MVA and other independent variables : Coefficients

Model Unstandardized Standardized

Coefficients Coefficients t Sig.
B Std. Error Beta
6 (Constant) -39376.146 12824.906 -3.070 .005
ROCE 357.325 184.554 .209 1.936 .063
Average_RONW -2935.262 1591.073 -.224 -1.845 .076
Average_PATM 4586.388 1447.089 2.317 3.169 .004
Average_Dividend_yield -4839.395 1183.951 -.637 -4.087 .000
Average_Dividend_payout 1114.574 268.716 .624 4.148 .000
Average_NIM 9046.768 3321.824 .451 2.723 .011
Average_ROA -50402.643 18255.020 -2.064 -2.761 .010
Average_Net_NPAs_to_Net_Advances 4196.519 1953.941 .333 2.148 .041

a. Dependent Variable: MVA

Source: Authors computations

Great Lakes Herald Vol 9 , No 1 , March 2015 Page34