Unveiling Financial Insights: Exploring the Dynamics of DCCB, Mahabubnagar

CHAKRAVARTHY VARE; PROF. I. ANAND PAWAR

CHAKRAVARTHY VARE DR B R AMBEDKAR OPEN UNIVERSITY
PROF. I. ANAND PAWAR Dr. B.R. Ambedkar Open University Hyderabad - 500 033. (TS) India

Keywords: Asset Quality, Bivariate, CAMELS, DCCB, Mahabubnagar, OLS, ROA

Abstract

Purpose:This research aims to analyse the financial performance of District Cooperative Central Bank Ltd., Mahabubnagar (hereafter referred to as 'the DCCB') from 2018-19 to 2022-23. Utilizing CAMELS ratios, the study explores the relationships between key financial indicators and the dependent variable, Return on Assets (ROA). Employing Bivariate Correlation and Ordinary Least Squares (OLS) analysis, the objective is to provide insights into the impact of various financial measures on the DCCB's overall performance.

Methodology:This study adopts a quantitative and observational approach, systematically examining financial data through a correlational research design. Secondary data from official records and regulatory publications of the DCCB, Mahabubnagar, covering the period 2018-19 to 2022-23, is analyzed using Bivariate Correlation to assess linear relationships. Additionally, Ordinary Least Squares (OLS) regression analysis is applied to quantify the effect of independent variables on Return on Assets (ROA).

Findings:The study reveals significant correlations within the financial dynamics of the DCCB, emphasizing a robust positive association (r = 0.994, p < 0.01) between Return on Assets (ROA) and Earnings/Profitability, highlighting the direct impact of efficient asset utilization on heightened profitability. Additionally, a positive correlation (r = 0.567, p < 0.05) between ROA and Asset Quality underscores the pivotal role of sound asset management in positively influencing the bank's overall profitability. Nevertheless, the delicate equilibrium required between financial stability and optimizing returns is evident, as indicated by the adverse effects of Higher Asset Quality (-0.28365) and Solvency (-0.18556) on ROA, highlighting nuanced challenges faced by the DCCB, Mahabubnagar.

Conclusion:The study establishes a strong positive link between Return on Assets (ROA) and Earning Capability, highlighting the direct impact of efficient asset utilization on increased profitability. A robust Earning Capability emerges as a critical factor for long-term sustainability. The delicate balance required between higher Asset Quality and Solvency is emphasized, revealing the intricate challenges faced by the DCCB. The positive correlation observed between ROA and Asset Quality underscores the pivotal role of sound asset management in influencing the overall profitability of the DCCB. In summary, the study concludes that a well-managed bank, optimizing capital utilization, positively influences Earning Capability, fostering a correlation with Return on Assets (ROA). However, maintaining a delicate balance between financial stability and growth potential is crucial for upholding investor confidence and ensuring sustained stock performance.Top of Form

Author Biography

PROF. I. ANAND PAWAR, Dr. B.R. Ambedkar Open University Hyderabad - 500 033. (TS) India

Dean, Faculty of Commerce & Business Management Head, Dept of Business Management

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