(A) DISCRIPTIVE ANALYSIS.

CAPITAL RATIO DEPOSITS RATIO LIQUIDITY RATIO PROFIT

Mean 24.04989 13.40031 13.99095 5.283240
Median 28.30239 14.74380 12.94427 5.973367
Maximum 43.27742 32.93365 38.10812 15.24038
Minimum 0.930889 0.759013 0.024859 -2.465515
Std. Dev. 14.65701 10.08227 9.969641 2.898637
Skewness -0.330508 0.241493 0.455153 -0.480000
Kurtosis 1.727416 2.006546 2.577215 4.395097

Jarque-Bera 8.568386 5.084275 4.197519 11.94956

Probability 0.013785 0.078698 0.122608 0.002542

Sum 2404.989 1340.031 1399.095 528.3240

Sum Sq. Dev. 21267.97 10063.57 9839.980 831.8078

Observations 100 100 100 100

INTERPETATION.
NORMALITY.

As the above table is showing majority of variables has skewness value in his threshold
range which is (-1 to +1) it means the data which we have collected is normal.

MEAN.

The data is reflecting the mean net profit is 5.28 MILLION.

(B)UNIT ROOT TEST.
Capital ratio .

Null Hypothesis: Unit root (individual unit root process)

Series: CAPITAL_RATIO
Date: 11/28/19 Time: 12:41
Sample: 2009 2018
Exogenous variables: Individual effects
User-specified lags: 1
Total (balanced) observations: 72
Cross-sections included: 9 (1 dropped)

Method Statistic Prob.**

ADF - Fisher Chi-square 44.2402 0.0005
ADF - Choi Z-stat -2.26845 0.0117

** Probabilities for Fisher tests are computed using an asymptotic Chi

-square distribution. All other tests assume asymptotic normality.

Intermediate ADF test results CAPITAL_RATIO

Cross
section Prob. Lag Max Lag Obs
Bank1 0.6186 1 1 8
Bank2 Dropped from Test
Bank3 0.0002 1 1 8
Bank4 0.0841 1 1 8
Bank5 0.5362 1 1 8
Bank6 0.8002 1 1 8
Bank7 0.0005 1 1 8
Bank8 0.4565 1 1 8
Bank9 0.3508 1 1 8
Bank10 0.7523 1 1 8

INTERPETATION.

In the above data is showing that the variance is equal and the probability value of CAPITAL
RATIO is significant which is less than 0.05 that is 0.0005 which shows the value is
significant and the data we have collected is stationary.

Deposit ratio.
Null Hypothesis: Unit root (individual unit root process)
Series: DEPOSITS_RATIO
Date: 11/28/19 Time: 13:13
Sample: 2009 2018
Exogenous variables: Individual effects
User-specified lags: 1
Total (balanced) observations: 72
Cross-sections included: 9 (1 dropped)

Method Statistic Prob.**

ADF - Fisher Chi-square 20.7174 0.2939
ADF - Choi Z-stat -0.36960 0.3558

** Probabilities for Fisher tests are computed using an asymptotic Chi

-square distribution. All other tests assume asymptotic normality.

Intermediate ADF test results DEPOSITS_RATIO

Cross
section Prob. Lag Max Lag Obs
Bank1 0.6186 1 1 8
Bank2 Dropped from Test
Bank3 0.8643 1 1 8
Bank4 0.4252 1 1 8
Bank5 0.4333 1 1 8
Bank6 0.6218 1 1 8
Bank7 0.0045 1 1 8
Bank8 0.4614 1 1 8
Bank9 0.3357 1 1 8
Bank10 0.7492 1 1 8

INTERPETATION.

In the above data is showing that the variance is not same and the probability value of
DEPOSIT RATIO is insignificant which is grater than 0.05 that is 0.2939 which shows the
value is insignificant and the data we have collected is Non-stationary.

Liquidity ratio .

Null Hypothesis: Unit root (individual unit root process)

Series: LIQUIDITY_RATIO
Date: 11/28/19 Time: 13:14
Sample: 2009 2018
Exogenous variables: Individual effects
User-specified lags: 1
Total (balanced) observations: 80
Cross-sections included: 10

Method Statistic Prob.**

ADF - Fisher Chi-square 16.0356 0.7144
ADF - Choi Z-stat 1.57024 0.9418

** Probabilities for Fisher tests are computed using an asymptotic Chi

-square distribution. All other tests assume asymptotic normality.
Intermediate ADF test results LIQUIDITY_RATIO

Cross
section Prob. Lag Max Lag Obs
Bank1 0.2704 1 1 8
Bank2 0.6261 1 1 8
Bank3 0.9643 1 1 8
Bank4 0.2475 1 1 8
Bank5 0.7300 1 1 8
Bank6 0.0252 1 1 8
Bank7 0.9258 1 1 8
Bank8 0.9637 1 1 8
Bank9 0.5044 1 1 8
Bank10 0.9870 1 1 8

INTERPETATION.

In the above data is showing that the variance is not same and the probability value of
LIQUIDITY RATIO is insignificant which is less than 0.05 that is 0.7144 which shows the
value is insignificant and the data we have collected is Non-stationary.

Bank profitibality.

Null Hypothesis: Unit root (individual unit root process)

Series: PROFIT
Date: 11/28/19 Time: 13:15
Sample: 2009 2018
Exogenous variables: Individual effects
User-specified lags: 1
Total (balanced) observations: 80
Cross-sections included: 10

Method Statistic Prob.**

ADF - Fisher Chi-square 36.5799 0.0131
ADF - Choi Z-stat -2.45354 0.0071

** Probabilities for Fisher tests are computed using an asymptotic Chi

-square distribution. All other tests assume asymptotic normality.

Intermediate ADF test results PROFIT

Cross
section Prob. Lag Max Lag Obs
Bank1 0.2112 1 1 8
Bank2 0.2610 1 1 8
Bank3 0.6347 1 1 8
Bank4 0.8079 1 1 8
Bank5 0.0232 1 1 8
Bank6 0.1551 1 1 8
Bank7 0.0194 1 1 8
Bank8 0.3205 1 1 8
Bank9 0.0490 1 1 8
Bank10 0.3682 1 1 8
INTERPETATION.

In the above data is showing that the variance is equal and the probability value of BANK
PROFITIBILITY is significant which is less than 0.05 that is 0.0131 which shows the value
is significant and the data we have collected is stationary.

(C).CORRELATION ANALYSIS.
Covariance Analysis: Ordinary
Date: 11/28/19 Time: 13:23
Sample: 2009 2018
Included observations: 100

Correlation
t-Statistic
CAPITAL DEPOSITS LIQUIDITY
Probability PROFIT RATIO RATIO RATIO
PROFIT 1.000000
-----
-----

CAPITAL_RATIO 0.131258 1.000000

1.310723 -----
0.1930 -----

DEPOSITS_RATIO 0.110054 0.843527 1.000000

1.096139 15.54777 -----
0.2757 0.0000 -----

LIQUIDITY_RATIO 0.534523 0.325794 0.465665 1.000000

6.261003 3.411319 5.209092 -----
0.0000 0.0009 0.0000 -----

INTERPETATION.

For Capital Ratio.

The above table is showing that the CAPITAL RATIO have POSITIVELY
CORRELATED with DEPOSIT RATIO , LIQUIDITY RATIO and BANK
PROFITIBILITY because the threshold range is form -1 to+1 an the value is
between threshold range.

As T calculated is greater than T tabulated which is 1.96 so the values of T

calculated of DEPOSIT RATIO and LIQUIDITY RATIO is greater than T tabulated
so this also shows the positive correlation with CAPITAL RATIO, but the BANK
PROFITIBILITY is showing T calc. less from T tab. so there is insignificant relation
of BANK PROFITIBILITY with CAPITAL RATIO.
As probability is also showing the significantly correlation of DEPOSIT RATIO and
LIQUIDITY RATIO with CAPITAL RATIO. Because the significant value of
probability is less than 0.05 and DEPOSIT RATIO have 0.0000 and LIQUIDITY
RATIO have 0.0009 value of probability , so it is significantly correlated, but the
BANK PROFITIBILITY have insignificant relationship with CAPITAL RATIO
because its value is 0.1930 which greater than significant value of probability.

For Deposit Ratio.

The above table is showing that the DEPOSITS RATIO have POSITIVELY
CORRELATED with CAPITAL RATIO , LIQUIDITY RATIO and BANK
PROFITIBILITY because the threshold range is form -1 to+1 an the value is
between threshold range.

As T calculated is greater than T tabulated which is 1.96 so the values of T

calculated of CAPITAL RATIO and LIQUIDITY RATIO is greater than T tabulated
so this also shows the positive correlation with DEPOSIT RATIO, but the BANK
PROFITIBILITY is showing T calc. less from T tab. so there is insignificant relation
of BANK PROFITIBILITY with DEPOSIT RATIO.

As probability is also showing the significantly correlation of CAPITAL RATIO and

LIQUIDITY RATIO with DPOSIT RATIO. Because the significant value of probability
is less than 0.05 and CAPITAL RATIO have 0.0000 and LIQUIDITY RATIO have
0.0000 value of probability , so it is significantly correlated, but the BANK
PROFITIBILITY have insignificant relationship with DEPOSIT RATIO because its
value is 0.2757 which greater than significant value of probability.

For Liquidity Ratio.

The above table is showing that the LIQUIDITY RATIO have POSITIVELY
CORRELATED with CAPITAL RATIO , DEPOSIT RATIO and BANK
PROFITIBILITY because the threshold range is form -1 to+1 an the value is
between threshold range.

As T calculated is greater than T tabulated which is 1.96 so the values of T

calculated of CAPITAL RATIO , BANK PROFITABILITY and DEPOSIT RATIO is
greater than T tabulated so this also shows the positive correlation with LIQUIDITY
RATIO.

As probability is also showing the significantly correlation of CAPITAL RATIO ,

DEPOSIT RATIO and BANK PROFITIBILITY with LIQUIDITY RATIO. Because the
significant value of probability is less than 0.05 and CAPITAL RATIO have 0.0009 ,
DEPOSIT RATIO have 0.0000 and BANK PROFITIBILITY have 0.0000 value of
probability , so it is significantly correlated,
(D) HUSMAN TESTING.
Correlated Random Effects - Hausman Test
Equation: Untitled
Test cross-section random effects

Chi-Sq.
Test Summary Statistic Chi-Sq. d.f. Prob.

Cross-section random 5.304493 3 0.1508

If the random effect model have a significant value less than 0.05 than we use the fixed method and if the
significant value is greater than 0.05 then we use the random method for analysis. The table is showing the
significant value 0.15 that is great than 0.05 so we use the random effect model for analysis.

Also the table showing Adjusted R square value is 0.51 that means all the independent variables have a
combining impact of 51% on dependent variable.

The F-calculated have a value 9.84 that is greater than F-tabulated value that means this model is significant.

(E)HYPOTHESIS TESTING / REGRESSION.

Random and fixed effect model.
Random testing.

Dependent Variable: PROFIT

Method: Panel EGLS (Cross-section random effects)
Date: 11/28/19 Time: 13:37
Sample: 2009 2018
Periods included: 10
Cross-sections included: 10
Total panel (balanced) observations: 100
Swamy and Arora estimator of component variances

Variable Coefficient Std. Error t-Statistic Prob.

CAPITAL_RATIO 0.041419 0.068384 0.605681 0.5462

DEPOSITS_RATIO -0.073826 0.104894 -0.703812 0.4833
LIQUIDITY_RATIO 0.138508 0.051019 2.714844 0.0079
C 3.338551 1.144388 2.917324 0.0044

Effects Specification
S.D. Rho

Cross-section random 1.590099 0.3841

Idiosyncratic random 2.013462 0.6159

Weighted Statistics
R-squared 0.074469 Mean dependent var 1.963936
Adjusted R-squared 0.045546 S.D. dependent var 2.085533
S.E. of regression 2.037486 Sum squared resid 398.5294
F-statistic 2.574746 Durbin-Watson stat 1.351007
Prob(F-statistic) 0.058400

Unweighted Statistics

R-squared 0.310641 Mean dependent var 5.283240

Sum squared resid 573.4141 Durbin-Watson stat 0.938965

INTERPRETATION.

As the above table is showing that in random effect model we use

which have liquidity value that is significant and the other deposit and
capital ratio is in-significant because the value is greater than 0.05.

(F) HETEROSKEDASTICITY.
Panel Cross-section Heteroskedasticity LR Test
Null hypothesis: Residuals are homoscedastic
Equation: UNTITLED
Specification: PROFIT CAPITAL_RATIO DEPOSITS_RATIO
LIQUIDITY_RATIO C

Value Df Probability
Likelihood ratio 82.53950 10 0.0000

LR test summary:
Value Df
Restricted LogL -227.5790 96
Unrestricted LogL -186.3092 96

INTERPRETATION.

In the above table there is a issue of hetroskedasticity in the data because the probability
value is less than 0.05 so if we increase the observations then we resolve this issue.
 RESEARCH HYPOTHESIS RESULT.

Sr. No Statement Decision

H1 capital ratio has positive impact on bank profitability Not accepted, due to
T-statistics and
probability value are
insignificant
H2 deposit ratio has positive impact on bank profitability Not accepted, due to
T-statistics and
probability value are
insignificant
H3 Liquidity ratio has positive impact on bank profitability Accepted, due to
correlation, T-tab and
probability value are
significant