Performance Of Indian Banks Research Articles

Bank-group wise Comparison of Loan Recovery Performance of Commercial Banks in India

In scholarly banking literature, the non-performing loans are associated with bank runs, bank failure and eventual management quality of banks. Non-performing loans have both exogenous and endogenous attributions in banking literature. However, macroeconomic conditions in an economy being ceteris paribus, empirical literature finds support for the 'bad management' hypothesis attributing high degree of non-performing loans to individual administration of the banks. This paper empirically analyses the non-performing assets indicators related to loan recoveries of the four commercial bank groups in Indian banking sector and compares the divergences in those indicators using ANOVA and GLS panel data regression model and attributes these divergences to the management quality of the bank groups.

Совершенствование оценки кредитоспособности заемщиков, реализующих долгосрочные инвестиционные проекты

Development of the long-term investment market is a condition for the formation of the main factors of economic growth and successful implementation of long-term infrastructure projects in modern Russia. The role of bank lending for long-term investment projects is to increase against the background of the consequences of the economic crisis and budget deficit. The article presents bank performance indicators for financing of long-term investment (infrastructure) projects. The author draws a conclusion on the dominant position of banks with state participation in long-term lending. The article considers the factors affecting the tendency of banks to long-term lending. The author also analyzes the practical experience of large domestic banks’ participation in financing of long-term investment projects. Problems and credit risks of long-term investment projects are identified. In conclusion, the author formulates recommendations on the directions and tools to improve the system for assessing the credit risks of investment projects in commercial banks. It is recommended to supplement this system with indicators of the structure of long-term investments, profitability of permanent capital and stability of the loaner’s efficient operation, as well as to ensure additional consideration of risk factors. The author defines the measures to expand the practice of syndicated lending, improving the mechanism providing state guarantees, and developing tools for cooperation between the bank and the loaner as promising areas for the development of long-term loans.

A Study Of Indian Private And Public Sector Banks With Special Reference To Impact Of Post Merger And Acquisition Venture On Liquidity And Profitability

This study was directed to assess the impact of merger and acquisition activities on the performance of Banks in India. The paper reviews the trends in M and A’s in Indian banking and then impact of M and A’s has been studied. The study covers the area of performance evaluation of M and A’s in Indian banking sector during the period pre and post period of six years of Merger and Acquisition activity. The paper studied the post merger financial performance of merged banks with the help of financial parameters. The study recommended that policies and strategies instituted by management, for instance the credit policy, should be re-visited in order to enhance internal and external operations, the logistical framework support should be improved; a more comprehensive approach to integrated marketing communications mix should be put in place in the promotion of the Bank’s existing and added products so as to gain more market share.

МЕРЕЊЕ ПЕРФОРМАНСИ БАНКАРСКОГ СЕКТОРА РЕПУБЛИКЕ СРБИЈЕ ПУТЕМ CAMELS МЕТОДА

Realization of the undeniable role of banks in the functioning of the economic system assumes their successful business, based on the achievement of key financial performance. Interrelatedness and interdependence of bank performance indicators, their dynamic relationship, and interaction, on the one hand, as well as differences and contradictions, on the other hand, require precise monitoring and harmonization by banks, in order to achieve adequate business results and minimize negative financial developments. In this sense, it is very important to choose appropriate ways to measure and manage bank performance. A key role in this process belongs to a banking rating system, measured by CAMELS model. Therefore, the paper attempts a comprehensive analysis of bank performance measurement, using CAMELS model. The aim is to examine the possibility of applying this model to effectively measure the performance of the banking sector in the Republic of Serbia.

Methodological Approaches to Constructing a System for Comprehensive Statistical Analysis of Bank Performance

The article is focused on elaborating essential methodological approaches to constructing an effective system for comprehensive statistical analysis of bank performance. The article’s objective is to provide scientific justification of methodological principles for constructing this system. Special importance and significance of such analysis for the effective bank management is emphasized. Besides that, the significance of the analysis is caused by the diversity of banks’ links with clients, shareholders, partners, competitions, National Bank and power bodies, population and mass media.
 The sound assessment of bank performance and management decision making process is based on an advanced statistical analysis. The statistical toolkit designed for analytical justifications of management decisions needs to be built on the principles underlying statistical support for management: comprehensiveness and consistency. A major part of bank performance indicators are indicators of their financial situation in view of the sufficiency of capital, solvency, liquidity, reliability, profitability. An important background for assessing the financial situation of banks and analysis of management efficiency is a study of the bank system in its relationship with the external environment of its operation, i. e. the national economy. 
 At the level of an organization, the bank statistics consists of two statistical information modules: external and internal one. A system of indicators can be structured in form of four interlinked modules of financial and economic indicators, with each contributing to problem solutions involved in a study of bank performance. An important condition for applications of the proposed set of indicators is that their computation must be supplemented by an analysis of dynamics intensity. This allows for finding internal patterns of development and tendencies specific for the operation process in bank sector. The proposed scheme for statistical analysis of management efficiency in the bank system allows one to combine the existing methodical approaches, synthesize their essential advantages and detect the drawbacks.

ОСОБЛИВОСТІ ФІНАНСОВОЇ РЕСТРУКТУРИЗАЦІЇ КОМЕРЦІЙНИХ БАНКІВ В УКРАЇНІ

The necessity of financial restructure, as an effective transformation mechanism of credit – financially institution in terms of unstable economic was substantiated in the article. Its role and place were explored in the modern terms in Ukraine’s Bank Business development. The modern condition of Ukraine’s bank system and performance indicators during 2008-2018 have been analyzed. Forms of restructuring have been given, that are to be used in post-crisis period.

Financial Performance of Public Sector Banks in India : A Post Reform Analysis

Financial Performance of Public Sector Banks in India : A Post Reform Analysis

Stock Market Performance and Efficiency of Banks in a Developing Economy: Evidence from the Indian Banking Sector

Many studies have been conducted on bank efficiency and bank performance both in developed and developing economies. Although abundant research on the association of emerging dimensions of stock performance with bank efficiency is available for the developed countries, such research in developing economies is limited. In the light of this, a model is constructed with stock market return as the principal variable along with bank efficiency and bank-specific factors and tested for the Indian economy. The model was developed using data envelopment analysis (DEA) for Indian banks. Panel data regression analysis was used to examine the empirical association between efficiency measures and market performance measures. The regression results confirmed the presence of a statistically significant association between operational efficiency and market performance of Indian banks. Operationally efficient banks create more value and returns to their investors and are thus found to be effective.

BOARD OF DIRECTORS STRUCTURE AND BANK�S PERFORMANCE: EVIDENCE FROM BANGLADESH

ABSTRACT The purpose of the study is to explore impact of the characteristics of board of directors (BoD) structure on banking performance indicators of banking sector in Bangladesh. The sample size of the study consists of 31 banks in Bangladesh with complete profile of total 294 directors of the banks. Return on assets (ROA), return on equity (ROE), non-performing loan (NPL) and capital adequacy ratio (CAR) of the 31 banks have been selected as measures of banking performance. Besides, BoD structure of world’s top 5 biggest banks which have reached into these positions due to their better performance have been taken into consideration to depict the international best practices analyzing the complete profile of 66 board members of the banks for making comparison. The research uses three categories of characteristics of BoD structure namely board composition, educational qualification, and professional experience. Total 13 characteristics of BoD have been considered under these 3 categories. Regressions have been performed separately for ROA, ROE, NPL and CAR. The research paper provides empirical evidence that size of board of directors matters in explaining ROA. Besides, existence of civil service holders as member of BoD matters in explaining ROE, NPL and CAR. The study will support policy makers to develop and execute proper amendments toward the transition into good corporate governance and better banking performance. Literatures have been rarely found that focus on the impact of board of directors structure on bank’s performance in Bangladesh. Hence, this study seems first to address such issue in the context of a developing country as Bangladesh covering 13 characteristics of BoD. Keywords Corporate governance; Board of directors; ROA, ROE, NPL, CAR.

Review of the functions of state banks in the system of ensuring the financial stability of the banking system of Ukraine

Taking into account the extremely important role of state banks for the development of the country (today, they are, in fact, create the banking market), there is a need to re-orient their activity content from generating systemic risk to generating systemic stability. Among the key components of financial stability highlighted by the central banks of the countries and which, using the tools of macro-prudential regulation, ensure the financial stability of the banking system, a special place is given to the ability of the latter to smoothly perform its functions. The effectiveness of such implementation is determined to be the prior condition for such operational continuity. For this purpose, methodical support is proposed for revising the functionality of Ukrainian state banks in terms of their efficiency, determined by the DEA model (Data Envelopment Analysis) with input parameters of customer funds, operating expenses, reserves for credit risks, and output parameters of interest income. The calculations of the performance indicators of state banks by the DEA model were made using DEAOS (Data Envelopment Analysis Online Software). The values of the efficiency indicator were calculated, the ranking of banks was conducted, and the optimal values of input and output parameters for inefficient banks were given. Recommendations were made to improve the efficiency of their activities: balancing the volume of customer funds with the volume of active operations; reducing operating expenses and reserves for credit risks by increasing the quality of loan portfolios. In conclusion, by using the DEA model it is possible not only to determine the measure of the efficiency of state-owned banks in the financial market, but also to make management decisions regarding the adjustment of the main indicators of their activities. This, ultimately, will contribute to raising the level of financial stability not only of state banks, but also of the entire banking system of Ukraine.

Board Characteristics and Firm Performance: Evidence from Banking Industry in India

The Board of Directors in a firm performs the primary role of internal control mechanism. This Study seeks to understand the relationship between internal governance and performance of banks in India. The research paper investigates the effect of board characteristics (proportion of independent directors, gender diversity, board size, meetings per year and attendance in board meetings) on the firm performance. This paper evaluates the impact of corporate governance mechanisms on bank’s financial performance using panel data for 28 listed banks at National Stock Exchange of India for the period of 2008-2014. Returns on Asset, Return on Equity, Tobin’s Q and Net Interest Income were used as the financial performance indicators. To estimate the relationship among governance and bank performance initially the Study uses Pooled Ordinary Least Square (OLS) Estimation and Generalized Least square (GLS) Estimation. Then a well-developed Generalized Method of Moments (GMM) Estimator is used to investigate the dynamic nature of performance and governance relationship. The Study empirically confirms that two step system GMM approach controls the problem of unobserved heterogeneity and endogeneity as compared to the OLS and GLS approach. The result suggests that banks with small board, boards with female members, and boards that meet more frequently tend to be more efficient and subsequently have a positive impact on performance of banks. The study offers insights to policy makers interested in enhancing the quality of governance of banks in India. In addition, the findings suggest that board characteristics play a vital role in the improvement of corporate governance mechanism for financial institutions. There is a great need to have efficient boards in banks to improve the overall health of the financial institutions and the economic development of the country.

Corporate Governance And Bank Performance: Islamic Versus Non-Islamic Banks In GCC Countries

The literature on corporate governance at corporations and conventional banks is extensive; however, it does not assign proper weight to Islamic finance institutions despite their growing importance in the global financial system. Important questions that are still unexplored to date include: What are the attributes of the corporate governance mechanisms at Islamic finance institutions? and How do their corporate governance attributes affect their performance and risk taking behavior? To answer these questions, we use an exhaustive sample of Islamic and non-Islamic banks in the Gulf Cooperation Council (GCC) region, in the years 2007 to 2009, i.e., around the global financial crisis of 2008 which represents a natural stress test. We assess the impact of the corporate governance characteristics ownership structure / concentration, board of directors' size, composition, and independence and the effectiveness of the legal system and investor protection of the country on a wide array of bank performance indicators, including profitability, efficiency, asset quality, and risk. We perform univariate and multivariate tests which control for many potentially confounding effects. Our results show that, during the 2008 global financial crisis, the return on assets and operating income-to-total assets were significantly higher at Islamic banks compared to non-Islamic banks in the GCC region by more than 1 and 2.5 percent, respectively. Islamic banks also exhibited a more prudent risk-management behavior and higher solvency than non-Islamic banks. Moreover, consistent with the notion of the importance of corporate governance, asset-productivity at Islamic banks is significantly increasing in family- and foreign-ownership and the effectiveness of the legal system and investor protection, and it is decreasing in board size and insiders. Furthermore, risk-taking behavior at Islamic banks is decreasing in government- and family-ownership and the investor-protection level in the home country. This study has important practical implications. Investors may consider including Islamic banks in their portfolios given their resilience to the financial crisis. Non-Islamic financial institutions may consider adopting some of the features of Islamic banking into their operating models. Policy makers can use our results for better policy formulation and regulation of their financial system.

Bank Performance versus Recession Indicators: A Linear Cointegration Approach

In this study, the researcher provides an empirical investigation of the nexus between banks’ performance and recession indicators. A sample size of 35 years was selected on annual data. A linear cointegration method was adopted after accounting for seasonality through logarithmic transformation. The results revealed that indicators of recession-exchange rate, inflation and interest rate maintain long run relationship with bank performance, and evidence of long run influence was established. Furthermore, we discover that within the purview of short run dynamic situation, inflation influences banks’ performance inversely, while exchange rate and interest rate increase with increase in banks’ performance. We therefore conclude that banks’ performance is driven by indicators of recession both in the short and in long run.

Impact of Social Networking Sites on Financial Performance: A Case Study of Indian Banks

The paper examines the presence and usage of Social Networking Sites particularly Facebook by banks in India. It primarily focuses on establishing the impact of Social networking sites on financial performance of banks in India. The data for this study is drawn from a survey of Facebook pages of 47 banks during the period of Feb-March 2015. The data set is limited to the banks that are operating as commercial banks as on March end 2014. Finally, a panel data of 47 commercial banks (Domestic only) turned out to be the sample of the study over the period 2012-2014. Independent sample t-test is used to find differences in the profile of banks that have Facebook pages and banks that do not and multiple regression is applied to find the impact of Facebook presence on profitability. The results show that of the banks observed, only 48.9 percent had their official Facebook page. The results of Independent sample t-test found several significant differences in the profile of banks that have Facebook pages and banks that do not. On an average, Facebook user banks are more profitable, rely less on traditional source of financing i.e. deposits, have higher asset quality in terms of lower NPA ratio and higher proportion of their income from non-traditional activities, although having higher expenses for fixed assets than Non-Facebook banks. Hence, Facebook user banks have shown a superior financial performance. However, the multiple regression results reveal that the profitability and having Facebook presence does not have any significant association.

The Impact of Mobile Banking on Financial Performance of Banks in India

The Impact of Mobile Banking on Financial Performance of Banks in India

Effects of Banks’ Free Capital on Performance in Light of the 2008 Financial Crisis: Evidence from the GCC Region

The purpose of this paper is to investigate the validity of the free cash to risk assets ratio (FCRAR) to predict some bank performance indicators, including, but not limited to, risk and return. This is a proposed alternative to the Basel accords’ capital adequacy measure which failed to predict bank insolvency, especially at times of economic downturn. Data were collected for the banking industry in the Gulf Cooperation Council of Arab Countries (GCC) region for the period from 2004-2013 to study the effect before and after the 2008 global financial crisis. Nonparametric mean rank tests and general linear model (GLM) with panel regression were used to investigate the predictability power of the proposed capital adequacy ratio. Our results provided evidence of FCRAR ability to predict changes, with the expected signs, for all bank performance indicators, before and after the crisis, except for the overall bank risk. As a result, we call upon scholars to keep the quest for a better capital adequacy measure that can monitor and predict bank insolvency. Bankers are advised to strive to strengthen their capital positions and not to depend totally on regulators-proposed measures to be able to prevent financial distress. The originality of this paper is drawn from the wider data covering a whole region of countries and the newly proposed alternative of capital adequacy measure.

Effect of NPAs on financial performance of public sector banks in India: A study of changing scenario

Effect of NPAs on financial performance of public sector banks in India: A study of changing scenario

The contribution of Islamic bank towards the stability of financial system in Indonesia

The objective of this paper is to examine the role of Islamic banks in the stability of financial system in Indonesia. We perform the empirical exercise into two stages. We first employ confirmatory factor analysis to validate the measures of our financial stability. It is found that the performance indicators of Islamic banks have a substantial contribution to the formation of the micro- and macro-prudential dimensions of financial stability together with the institutional Islamic bank dimension itself. Finally, the regression results show that the three aforementioned dimensions of the financial stability play a significant role in determining the stability of the financial system.

The contribution of Islamic bank towards the stability of financial system in Indonesia

The objective of this paper is to examine the role of Islamic banks in the stability of financial system in Indonesia. We perform the empirical exercise into two stages. We first employ confirmatory factor analysis to validate the measures of our financial stability. It is found that the performance indicators of Islamic banks have a substantial contribution to the formation of the micro- and macro-prudential dimensions of financial stability together with the institutional Islamic bank dimension itself. Finally, the regression results show that the three aforementioned dimensions of the financial stability play a significant role in determining the stability of the financial system.

European Banks in the 21st Century: Are Their Business Models Profitable?

Banks’ activity is challenged by the macroeconomic, financial and regulatory environment emerging from the financial crisis. Slower economic growth, low interest rates, more stringent regulation on capital and liquidity, the need to decrease leverage for a number of banks, increased market scrutiny following the new rules on crisis management have put pressure on pre-crisis Bank Business Models and highlighted the need for banks to renew the way in which they operate. In this paper we propose a new methodology to group European banks and identify different Business Models and Peer Groups in a machine learning framework. We then analyse the relationship between Business Models and a set of bank performance indicators and how this relationship has changed over time.