Working Capital Management’s Effect on Banks Profitability: Public Sector Banks of India

The objective of this chapter is to analyze the working capital management’s effect on public sector bank profitability. In an economy such as India, the role of public sector banks is very crucial. “Return on assets and return on equity” are representatives of bank profitability, while “current ratio, quick ratio, cash deposit ratio, and credit deposit ratio” have been considered for working capital representative. Secondary data have been employed for the study for 5 years from 2018 to 2022. To check the relationship between working capital factors and bank profitability, correlation and regression analysis has been used. As per analysis, working capital has a significant impact on a bank’s profitability. The most influential factor that impacts profitability is cash deposit ratio.