The study examines whether the Basel-III regulations impact the financial performance, operational efficiency and resilience of Indian banks. Further, the study tests whether there is a variance in the impact between private- and public-sector banks.
The study uses panel data regression on data from 16 private- and 12 public-sector banks from the years 2016–2022. Random-effect estimation is used, and robust standard errors are calculated.
The main findings indicate that the Basel-III regulations related to capital and leverage boost public-sector banks' financial performance and resilience. However, a similar impact is not detected in the case of private-sector banks.
The findings signify that the Basel-III framework does not address the differences between public and private-sector banks. Therefore, the policy implications are of practical importance and indicate that Basel-III regulations should not be considered a one-size-fits-all type of bank. Instead, policymakers should consider the structural differences between private and public-sector banks concerning Basel-III regulations.
The study addresses a significant limitation of the Basel-III regulations, which, in their current state, somehow fail to account for the differences between the public- and private-sector banks.
