Empirical Evidences of Value Creation from Banking Industry of India

Arvind Kumar Banger; S. K. Sharma; Rahul Chaudhary

Arvind Kumar Banger Assistant Professor, Department of Management, Faculty of Social Sciences, Dayalbagh Educational Institute (Deemed-University), India;
S. K. Sharma 2 Professor, Department of Management, Faculty of Social Sciences, Dayalbagh Educational Institute (Deemed-University), India;
Rahul Chaudhary Research Scholar, Department of Applied Business Economics, Faculty of Commerce, Dayalbagh Educational Institute (Deemed-University), India

Abstract

In wake of recent economic reforms in India with an aim of stabilizing the economy of India under the era of globalisation, banking
industry has experienced a canonical shift in terms of value creation practices, methods and metrics for measuring bank’s performance. Value based management has long been hailed as the major objective of financial management of banks. A new trajectory of
value based performance evaluation metrics have evolved and became an imperative of evaluating the performance of banks. The
present study has been undertaken with the objective to measure the performance and value creation in the selected banks. The
selected sample was taken from the public and private sector banks listed on stock exchange in India. In this study, Economic Value
Added (EVA) and Market Value Added (MVA) across the selected banks were calculated based on the accounting figures and their
difference was determined. The results showed significant difference between economic value added and market value added in
selected banks is quite meaningful and significant.