ORIGINAL PAPER Profitability drivers for Indian banks: a dynamic panel data analysis Dhananjay Bapat 1 Received: 19 May 2016 / Revised: 20 July 2017 / Accepted: 3 October 2017 Ó Eurasia Business and Economics Society 2017 Abstract The study aims to find the factors such as bank specific factors, banking industry factors and macroeconomic factors that affect bank profitability in India. The paper employs the data from Indian Public sector and Indian private sector banks for the period from 2006–2007 to 2012–2013. Both these banks contribute to more than 90% of total business of scheduled commercial banks in India. The study applies the dynamic panel data analysis. The dependent variables include return on average assets and return on equity, and independent variables include bank specific factors, banking industry factors, and economic factors. Among the bank specific factors, non performing loans and cost to income ratio negatively affects the bank profitability, and diversification measures do not affect the bank profitability. Keywords Bank specific factors Á Banking industry factors Á Macroeconomic factors Á Profitability Á Diversification Á Non-performing loan (NPL) Á Bank specific factors 1 Introduction Indian banking is receiving increased attention in recent years because of higher gross domestic product (GDP) growth rates. During the global financial crisis, while banks from developed countries were affected, Indian banks to some extent remain insulated. Despite the fact that India is an important emerging market economy, we find that little attention is given to explore the drivers of bank profitability. In this context, the study on performance of Indian banking will be of greater interest when studied both before and after the global financial crisis. Various profitability & Dhananjay Bapat dhananjay1304@gmail.com 1 Indian Institute of Management, Sejbahar, Raipur, India 123 Eurasian Bus Rev https://doi.org/10.1007/s40821-017-0096-2