paper compares the financial health of public and private sector banks in India and asks wh
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Abstract
Design/methodology/approach: Eight public sector banks (PSBs) and eight private sector banks (PVBs) were studied over six financial years, FY 2020–21 to FY 2025–26 (96 bank-year observations). Taffler scores were computed from audited annual report data, with the model’s four ratios adapted to the structure of bank balance sheets. Group differences were tested with Welch’s independent-samples t-test and confirmed with the Mann–Whitney U test.
Findings: The mean Taffler score of private sector banks (0.1135) was 1.8 times that of public sector banks (0.0625), and the difference was significant (Welch’s t(8.61) = −3.91, p = .004; Hedges’ g = 1.85). About three-quarters of the gap came from a single ratio, profit before tax to current liabilities. Every bank fell below the conventional cut-off of 0.20, which says more about the poor fit of manufacturing-era thresholds to banks than about the banks themselves.
References
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Agarwal, V., & Taffler, R. (2008). Comparing the performance of market-based and accounting-based bankruptcy prediction models. Journal of Banking & Finance, 32(8), 1541–1551.
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Axis Bank. (2021–2026). Annual reports, 2020–21 to 2025–26. https://www.axisbank.com
Bank of Baroda. (2021–2026). Annual reports, 2020–21 to 2025–26. https://www.bankofbaroda.in
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