Download or read book Bank Diversification in India written by Dr. Somnath Vibhute and published by Blue Rose Publishers. This book was released on 2023-10-11 with total page 232 pages. Available in PDF, EPUB and Kindle. Book excerpt: Bank Diversification in India is an in-depth analysis of business diversification of commercial banks in India during the last three decades. The concept of diversification is explained in a lucid way. The book explains the strength of bank diversification and its comparison among different Bank groups in India. Furthermore, it analyses the changing income patterns and profitability of various bank groups in recent years. The book ends with reflecting on the contemporary phase of computerization and digitization of banking products thereby impacting the income-earning and profit-making capacity of commercial banks. It further suggests a number of ways and means which can be adopted by bankers in order to enhance the income streams and profitability in the era of modern banking.

Download or read book Income Diversification written by Shraddha Sharma and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Internationally, the transformation in banking industry has opened up new opportunities for banks to diversify through own expansion and/or strategic association. They are focusing more on non-interest income as it enables to setoff the reduction in their interest income due to falling interest rate as well as increasing income from fee-based activities. Indian banking industry is also going through a phase of changing strategies to evolve in the competitive environment. Considering the importance of income diversification, it had become imperative to investigate how the prospects of non-interest income work in the Indian banks. This paper makes an attempt to explore income diversification in the Indian banking industry. Applying trend analysis and correlation, the paper analyzes the trends in interest income and non-interest income using aggregate and bank-wise secondary data from 2003 to 2016. Also, the paper studies the share of non-interest income components. The results reveal that in Indian banking industry, interest income is still the dominant source of income though the share of non-interest income is also increasing due to higher growth rate of non-interest income as compared to interest income. In non-interest income components, the share of investment-related other income is also the highest compared to the banking-related other income. Aggregate as well group-wise, public and private sector banks are having negative correlation between non-interest income share and interest income share, which means Indian banking sector is enjoying income diversification benefits. The results of Herfindahl-Hirschman Index (HHI) also show that private sector banks are more diversified compared to public sector banks.

Download or read book Geographic Diversification in Indian Banking written by Joyeeta Deb and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Indian banking sector has undergone sea changes over the years. Much of these changes are the consequences of irreversible process of liberalization, globalization and privatization. Banks in India, to a large extent, have become functionally dynamic and operationally efficient. One of the important developments one can witness in the sector is the growing scale of geographical and revenue diversification over the years. Geographical diversification is expected to bring positive results by way of reduced risks and increased returns for the Indian banks. Against the backdrop of existing literature which renders diverse views about the diversification benefits, the present study examines the manner and the extent to which banks are geographically diversified in the case of both public and private sector banks and analyzes its impact on the performance measured in terms of returns. The study uses a panel dataset of 40 observations for the period 1994-2014. In order to examine the impact of geographical diversification on bank's risk and returns, a Least Square Dummy Variable (LSDV) regression model is used. The results indicate that public sector banks are more diversified than private sector banks and the geographical diversification has a negative impact on the returns of the banks.

Download or read book Income Diversification and Bank Stability written by Navneet Kaur and published by . This book was released on 2019 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: Modern portfolio theory claims that diversification into non-correlated or negatively correlated activities reduces the overall risk of a portfolio. Considering the total income of a bank as a portfolio of interest income and non-interest income, this paper investigates how the variability of interest income and non- interest income, and covariance between interest income and non-interest income influence the various risk factors of banks. We set out a study in the Indian context. We have extracted data for the period 2005-2017 and employed an extended version of Ridge, Lasso and Elastics Net regression to take care of multi-collinearly in our data. We have considered 10-fold cross-validation techniques to get optimal values of tuning parameters for Ridge, Lasso, and Elastics Net regression (which is a convex combination of ridge and the LASSO). We have compared different regression techniques by comparing RMSE and R2. We observe that non-interest income is positively correlated with interest income in the Indian context, but it does stabilize variance, idiosyncratic risk & market risk (Beta) of Indian Banks.

Download or read book Indian Banking in the Globalised World written by R. K. Uppal and published by . This book was released on 2008 with total page 296 pages. Available in PDF, EPUB and Kindle. Book excerpt: ABOUT THE BOOK Banking sector reforms in India are aimed at induction of best international practices and technological changes for competing globally. The Reserve Bank of India (RBI) has time and again emphasised transparency, diversification of ownership and strong corporate governance to mitigate the prospects of systemic risks in the banking sector. Banking sector reforms have supported the transition of the Indian economy to a higher growth path, while significantly improving the stability of the financial system. In comparison with the pre-reform period, the Indian banking system today is more stable and efficient. However, the gains of the past decade need to be consolidated, so that these could be translated to drive the institutions, markets and practices into a mature financial system that can meet the challenges of globalisation. The banking system would, therefore, not only need to be stable, but also supportive of still higher levels of planned investments by channelling financial resources more efficiently from surplus to deficit sectors. Competitive pressures as well as prudential regulatory requirements have made banks risk-averse as reflected in their tendency to investment in relatively risk-free gilt instruments. The behaviour and strategies of banking business need changes in favour of risk-taking even while performing core activities. Also, there is a need to ensure long-term finance to support development and growth in the economy, even as restructuring takes place through mergers and universal banking. The present book addresses issues like Basel ? II Accord guidelines, second generation banking sector reforms, cost-benefit and productivity analysis of Indian banks, danger zone banks, privatisation and comparative efficiency of Indian banks and the recent reform measures. Vital statistics regarding the Indian banking sector and the recent Annual Policy Statement, 2008-09 of the RBI has also been discussed. About the author Dr. R.K. Uppal did his M.A. in economics from Punjabi University, Patiala in 1986. Thereafter, he obtained M.Phil. degree from MDU, Rohtak in 1987 and Ph.D. degree from Punjabi University, Patiala in 2003. Specialising in banking and finance, Dr. Uppal has 11 books to his credit and has published 40 research papers on the subject in reputed national and international journals. He has also presented more than 35 research papers in national and international conferences in Hawaii, Indonesia, Finland, Costa Rica, Australia, London and the UK. Presently, he is head of the Department of Economics, DAV College, Malout, Punjab and Principal Investigator of a UGC-financed research project on Indian banking. He is also Director of an ICSSR sponsored major research project on Indian banking.

Download or read book Income Diversification Funding Strategies written by Navneet Kaur and published by . This book was released on 2019 with total page 12 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyses the impact of bank's income diversification and funding strategies on Bank's Return on Asset and Z score (Proxy for Risk). Based on data from 2005- 2017 on Indian Public and Private sector banks. It has been found that even though the proportion of non-deposit funding is very less but still an important variable to study. It is found that Banks, who have higher proportion of non-deposit funding have higher Z score. For Public sector banks borrowings negatively impact the Return on Asset. Banks who diversify their income from non-interest income have higher non-deposit funding, return on Asset and Z score.

Download or read book Does Diversification Improve the Performance of German Banks Evidence from Individual Bank Loan Portfolios written by Evelyn Hayden and published by . This book was released on 2016 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Should banks be diversified or focused? Does diversification indeed lead to enhanced performance.

Download or read book Determinants of Commercial Bank Interest Margins and Profitability written by Asl? Demirgüç-Kunt and published by World Bank Publications. This book was released on 1998 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: March 1998 Differences in interest margins reflect differences in bank characteristics, macroeconomic conditions, existing financial structure and taxation, regulation, and other institutional factors. Using bank data for 80 countries for 1988-95, Demirgüç-Kunt and Huizinga show that differences in interest margins and bank profitability reflect various determinants: * Bank characteristics. * Macroeconomic conditions. * Explicit and implicit bank taxes. * Regulation of deposit insurance. * General financial structure. * Several underlying legal and institutional indicators. Controlling for differences in bank activity, leverage, and the macroeconomic environment, they find (among other things) that: * Banks in countries with a more competitive banking sector-where banking assets constitute a larger share of GDP-have smaller margins and are less profitable. The bank concentration ratio also affects bank profitability; larger banks tend to have higher margins. * Well-capitalized banks have higher net interest margins and are more profitable. This is consistent with the fact that banks with higher capital ratios have a lower cost of funding because of lower prospective bankruptcy costs. * Differences in a bank's activity mix affect spread and profitability. Banks with relatively high noninterest-earning assets are less profitable. Also, banks that rely largely on deposits for their funding are less profitable, as deposits require more branching and other expenses. Similarly, variations in overhead and other operating costs are reflected in variations in bank interest margins, as banks pass their operating costs (including the corporate tax burden) on to their depositors and lenders. * In developing countries foreign banks have greater margins and profits than domestic banks. In industrial countries, the opposite is true. * Macroeconomic factors also explain variation in interest margins. Inflation is associated with higher realized interest margins and greater profitability. Inflation brings higher costs-more transactions and generally more extensive branch networks-and also more income from bank float. Bank income increases more with inflation than bank costs do. * There is evidence that the corporate tax burden is fully passed on to bank customers in poor and rich countries alike. * Legal and institutional differences matter. Indicators of better contract enforcement, efficiency in the legal system, and lack of corruption are associated with lower realized interest margins and lower profitability. This paper-a product of the Development Research Group-is part of a larger effort in the group to study bank efficiency.

Download or read book An Empirical Study of Income Diversification and Its Impact on Profitability of Banks written by Santosh Kumar and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Objectives: The paper is studying diversification in income of Indian banks and impact of income diversification on profitability and sustainability of industry, mainly in environment shift of recent financial crisis. Statistical analysis: The study is a multivariate regression analysis to find diversification score on the secondary data for Indian banking industry for sample period of 10 years, from 2006 to 2015. Score of diversifications are calculated at two stages as DS (1), DS (2) to find share of non-traditional income in total income and categorization in non-traditional income respectively. The impact on the different income categories ; Share of Non Interest Income(SNI), Share of fee Based Income (S FI), Share of Other Income(S OT), are tested against selected control variables. F-test used to test hypothesis as direct association with two set of variables. Further criterion scores techniques (SIC), (AIC) and (HQIC) are use as model improvement to test goodness of fit of the model.Findings: The study found that income shift of new business lines helps banks to improve their profitability by dint of many barriers in implementation. The growth trend of such income is not stable during whole study period, majorly due to global financial crisis. In the library of literatures, the share of non-interest based income activities and fee based income sources has been more distinct for Private and Foreign banks, even though SBI and Its associate's banks are not far behind them. The role of the study to highlight the path for banks adopting new Non-interest income streams to enhance profitability and continuity in profitability. As reported, diversification in non-interest income sources may have positive impact on overall profitability and risk-adjusted performance along with improvement in stability of banking system. Other non-interest incomes are more changeable in compare to Fee based income generated by fee, commission and brokerage activity. By dint of many good effect of diversification banks, mainly in Indian context should take appropriate majors while diversification of its income.Application/Improvements: The study provide a complete understanding about the positive effect of income diversification on profitability of banks but the decision makers should take appropriate majors, while taking diversification decision.

Download or read book Stock Market s Assessment of Bank Diversification written by Michael J. Dempsey and published by . This book was released on 2013 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using data for four South Asian countries over a twelve-year period, we examine how the stock markets in these recently liberalised economies assess diversification attempts of listed public banks. We find that the income diversification has a significant positive association with market to book value and a significant negative association with return volatility. However, the relationship observed between diversification and markets' assessment of value and risk is non-linear. Relative to listed banks operating in India, the relationship observed remains less pronounced for the banks operating in Bangladesh, Pakistan and Sri Lanka.

Download or read book Financial Dependence Banking Sector Competition and Economic Growth written by Stijn Claessens and published by World Bank Publications. This book was released on 2005 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: "The relationships among competition in the financial sector, access of firms to external financing, and associated economic growth are ambiguous in theory. Moreover, measuring competition in the financial sector can be complex. In this paper Claessens and Laeven first estimate for 16 countries a measure of banking system competition based on industrial organization theory. They then relate this competition measure to growth of industries and find that greater competition in countries' banking systems allows financially dependent industries to grow faster. These results are robust under a variety of tests. The results suggest that the degree of competition is an important aspect of financial sector funding. This paper--a product of the Financial Sector Operations and Policy Department--is part of a larger effort in the department to study competition in banking"--World Bank web site.

Download or read book Ownership Structure and Growth in Interest and Non Interest Income in Banks written by Navneet Kaur and published by . This book was released on 2019 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyze the trend in growth of interest Income, non-interest income and components of Non-interest income and find the determinants of bank specific correlation between interest income growth and non-interest income growth. The study is based on data for Public sector banks, Private (Indian) sector banks and Private (Foreign) sector banks operating in India and covers the period from 2000-2017. It has been observed that Non-interest income is becoming less volatile over period. Correlation of Interest Income growth and Non-interest income growth for public sector banks and for private (Indian) banks is on negative side and for private (Foreign) banks correlation is on positive side. It has been found that noninterest income share is negatively contributing to bank specific correlation in interest income and non-interest income. Public sector banks have potential for diversification benefits from Brokerage, Treasury and Other income share. Private (Indian) sector banks have potential for diversification benefits from fee based income i.e. Brokerage share so, it makes more sense for Public sector banks and Private (Indian) banks to diversify further.

Download or read book Innovation and Profitability written by Dione Joelle and published by . This book was released on 2023-11-02 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Role of Banks in Economic Development The economic development of a country relies heavily on the pivotal role played by banks. Banks not only contribute significantly to economic growth but also play a crucial role in ensuring the financial stability of a nation. In emerging economies, banks hold special significance for three primary reasons. First, they actively foster the development of financial intermediaries and markets. Second, due to the absence of well-developed equity and bond markets, the corporate sector heavily relies on banks to fulfill its financing requirements. Third, in emerging markets like India, banks address the needs of a vast number of savers from the household sectors who prioritize stable income, liquidity, and the safety of their money, primarily due to their limited capacity to manage financial risks effectively. Evolution of Banking in a Changing Landscape Over the years, the forms of banking have undergone transformation in response to the evolving needs of the economy. Deregulation, technological advancements, and globalization have brought about a significant transformation in the banking and financial system. Banks have expanded their operations into areas that were traditionally beyond their scope, while non-banking intermediaries have started to assume many of the functions traditionally performed by banks. Consequently, banks find themselves competing not only amongst themselves but also with non-banking entities. This competition has intensified over time, compelling banking institutions worldwide to introduce innovative products, identify new sources of income, and diversify into non-traditional functions. Developed countries' financial institutions have effectively harnessed Information and Communication Technology (ICT) as a marketing tool in this regard. Challenges and Transformation in the Indian Banking Sector The Indian banking sector, which operated in a bureaucratic fashion before 1991, underwent a massive transformation following the opening up of the economy. The sector has faced unprecedented challenges with the advent of Liberalization, Privatization, and Globalization (LPG) in the Indian economy. Today, banks in India confront intense pressure in the volatile marketplace, driven by steep competition, globalization, escalating customer demands, and heightened exposure to credit risks. This pressure compels banks to explore innovative ways to enhance their profitability and sustainability.

Download or read book Deregulation and Efficiency of Indian Banks written by Sunil Kumar and published by Springer. This book was released on 2013-11-18 with total page 323 pages. Available in PDF, EPUB and Kindle. Book excerpt: ​ The goal of this book is to assess the efficacy of India’s financial deregulation programme by analyzing the developments in cost efficiency and total factor productivity growth across different ownership types and size classes in the banking sector over the post-deregulation years. The work also gauges the impact of inclusion or exclusion of a proxy for non-traditional activities on the cost efficiency estimates for Indian banks, and ranking of distinct ownership groups. It also investigates the hitherto neglected aspect of the nature of returns-to-scale in the Indian banking industry. In addition, the work explores the key bank-specific factors that explain the inter-bank variations in efficiency and productivity growth. Overall, the empirical results of this work allow us to ascertain whether the gradualist approach to reforming the banking system in a developing economy like India has yielded the most significant policy goal of achieving efficiency and productivity gains. The authors believe that the findings of this book could give useful policy directions and suggestions to other developing economies that have embarked on a deregulation path or are contemplating doing so.

Download or read book Relationship Among Revenue Diversification Stability and Performance written by Dr. Safdar Husain Tahir and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The study aims to investigate on the association among the revenue diversification, stability and bank performance of South Asian countries. The panel data sample of 89 banks from Pakistan, India, Bangladesh and Sri Lanka ranging for the period 2008 to 2014 were collected from the financial statements. Revenue diversification was taken as independent variable, whereas Return on Assets (Equity) ROA, ROE, Standard Deviation of Return on assets (equity) SROA, SROE, Z-score, Loan Losses Reserve to Non-performing loan LLRN, Non-performing loan to total loan (equity) NPLTL and NPLTE dependent variables. It was found a significant positive relationship between the revenue diversification and banks performance. Furthermore, it was concluded that the risk could be reduced and stability improved in South Asian banks through the strategy of diversification.

Download or read book Bank Size and Systemic Risk written by Mr.Luc Laeven and published by International Monetary Fund. This book was released on 2014-05-08 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: The proposed SDN documents the evolution of bank size and activities over the past 20 years. It discusses whether this evolution can be explained by economies of scale or “too big to fail” subsidies. The paper then presents evidence on the extent to which bank size and market-based activities contribute to systemic risk. The paper concludes with policy messages in the area of capital regulation and activity restrictions to reduce the systemic risk posed by large banks. The analysis of the paper complements earlier Fund work, including SDN 13/04 and the recent GFSR chapter on “too big to fail” subsidies, and its policy message is in line with this earlier work.

Download or read book India s and China s Recent Experience with Reform and Growth written by W. Tseng and published by Springer. This book was released on 2005-10-28 with total page 330 pages. Available in PDF, EPUB and Kindle. Book excerpt: Can China and India continue to rank among the fastest expanding economies? This book highlights what has worked and what more needs to be done to ensure sustained rapid economic growth and poverty reduction. Addressing the two countries' recent experiences with growth and reform, this book provides important insight for other developing economies.