...A Stochastic Approach to Indian Banking Sector : Technical Analysis of Private Sector Banks Dr. Rahul Rajan Abhilasha Srivastava Abstract The objective of this paper is to present a method for estimating the cost efficiency of Indian banks in order to study the degree of technical and cost performance of the Indian banking sector and to analyze how the banking sector has been affected by technical efficiency and cost efficiency. Initially, the evolution in the technical front in the banks between 2005 to 2012 is measured. For this analysis purpose a sample of 101 Indian banks including 28 public ,29 private and 44 foreign banks operating in India is taken for the period 2005-2012. For analysis purpose both the parametric method of productive efficiency frontier (Stochastic Frontier Analysis ) and nonparametric method (Data Envelopment Analysis) are taken. Introduction The financial system is the lifeline of the economy. The changes in the economy get mirrored in the performance of the financial system, more so of the banking industry. The banking system in India is significantly different from that of other Asian nations because of the country’s unique geographic, social, and economic characteristics. India has a large population and land size, a diverse culture, and extreme disparities in income, which are marked among its regions. There are high levels of illiteracy among a large percentage of its population but, at the same time, the country has a large reservoir...
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...Financial Performance Measurement of SBI Groups – An Empirical Study (Synopsis) Prasanta Saha Purash-Kanpur Haridas Nandi Mahavidyalaya, Howrah Introduction: Why you choose SBI? You have to clarify it in a paragraph. The Imperial Bank was established in 1921 by amalgamation of three presidency banks – the Bank of Bengal, the Bank of Bombay and the Bank of Madras under a special legislation. These presidency banks were created as a charter to deal in bill of exchange payable in British India and were an integral part of Indian treasury. The Imperial Bank acted as a banker of the government until the establishment of Reserve Bank of India in 1935. State Bank of India was formed on July 1, 1955 by nationalizing the Imperial Bank under the State Bank of India Act, 1955 which was passed in parliament on May 8, 1955. The main objective of nationalization was not only extending banking facilities to rural and semi-urban areas in the newly formed independent India but also to promote agricultural finance and help the government to pursue the board economic policies. Initially 60% stake in SBI was taken over by the Reserve Bank of India but the controlling interest has been transferred to the Government of India in 2008 to remove any conflict of interest as it is the country's banking regulatory authority. The State Bank Group, with a network of 18,266 branches including 4,724 branches of its five Associate Banks, dominates the banking industry in India. The market share of...
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...economy as a result of global financial crisis in late 2000s, the current study analyzes the performance of Indian banks using data envelopment analysis. The performance is measured in terms of technical efficiency, returns-to-scale, and Malmquist productivity index for a sample of 33 banks, consisting of 19 public sector and 14 private sector banks during the period spanning 1995-96 to 2009-10. The jackknifing analysis, followed by the dummy variable regression model is used to identify the outlier and its possible impact on overall efficiency trends. Findings reveal that efficiency scores are robust in the sense that the inclusion of outlier does not affect the overall efficiency trends. The public sector bank is faintly doing better than the private sector banks in terms of (i) technical efficiency since 2003-04 and (ii) scale efficiency from 2000-01 onwards. There is growing tendency of public banks operating under increasing returns to scale, implying that substantial gains could be obtained from altering scale via either internal growth or consolidation in the sector. The difference in the Total Factor Productivity (TFP) change between these two types of banks is found to be statistically significant in favour of public sector banks. The technological change has been the dominating source of productivity growth, whereas, the contribution of pure efficiency change and scale change are found to be negligible in Indian banking sector during the period of study. The reform in...
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...Bangladesh entered into the era of financial reform during the early 1980s. Most of the reforms initiated by the government have concentrated predominantly on the banking sector. Consequently, many changes relating to ownership, market concentration, regulatory measures and policies have taken place primarily to enhancing bank performance. In this regard, this study is undertaken to investigate the performance of commercial banks after the implementation of significant financial reform. Data Envelopment Analysis based frontier measures income and cost efficiency and traditional non-frontier measures non-performing loans and return on assets have been used for assessing bank performance. The findings indicate that income and cost efficiency of sample banks have increased by 37.84 percent and 15.28 percent respectively in 2008 compared to 2001. Similarly, non-performing loans and return on assets also report improvement in bank performance. The results generated by regression models indicate that foreign ownership has a statistically significant positive impact on bank performance. On the other hand, private ownership has favorable impact on income efficiency, return on assets, and non-performing loans, whereas negative impact on cost...
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...helps to Analyze the Financial Position and Performance of the Axis and Kotak Mahindra Bank in India based on their financial characteristics based on the CAMEL model and t-test which measures the performance of bank from each of the important parameter like capital adequacy, asset quality, management efficiency, earning quality, liquidity and Sensitivity. Bhayani (2006) analyzed the performance of new private sector banks through the help of the CAMEL model. Four leading private sector banks – Industrial Credit & Investment Corporation of India, Housing Development Finance Corporation, Unit Trust of India and Industrial Development Bank of India - had been taken as a sample. Sanjay J. Bhayani (2006) in his study, “Performance of the New Indian Private Banks: A Comparative study”. The study covered 4 leading private sector banks- ICICI, HDFC Bank, UTI and IDBI. The result showed that the aggregate performance of IDBI Bank is the best among all the banks. (Bhayani, 2006) Dr.K.Srinivas and L.Saroja (2013) conducted a study to compare the financial performance of HDFC Bank and ICICI Bank. From the study it is clear that there is no significance difference between the ICICI and HDFC bank’s financial performance but we conclude that the ICICI bank performance is slightly less compared with HDFC. (K. Srinivasl, 2013) There are number of indicators for evaluating financial performance of banks on the basis of the financial measures. Usually the financial performance of the institutions...
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...Term paper On A comparison of financial performance in the Banking sector- some evidence from bank Nifty. Under the guidance of Mr. K. S. Venkateswara Kumar Asst. professor Ch. H. S. Pavan Kumar 10102463 MBA – IV th sem K L University Vaddeswaram Abstract: The research paper analyzes the performance of the selected banks on the basis of the productivity and the profitability that are reflected in the stock prices. There are several dimensions through which an analysis can be done for a stable investment. The fundamental analysis and the technical analysis are the tools used in investment decisions. The fundamental analysis discusses about the industry analysis that gives the financial health of the companies, and the company analysis that gives the information regarding the investors’ preferences decided by the management. The decision making process plays a crucial role in performance of the banks. The price movements and historical trends are considered for technical analysis. By considering both the Fundamental and Technical analyses, a best portfolio can be created. This research paper also takes into account various determinants that influence the performance of a company. Keywords: ROA, PSB, SCP, e-banking. Introduction: The banking sector globally undergone rapid transformation in the recent decades driven by forces of Globalisation and the advent of technology. The Indian banking system is no exception, has undergone significant structural transformation...
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...return on equity. Design/methodology/approach: In this study VAIC™ is considered as a key valuation model for measuring the IC performance of Indian Banking Companies. Capital employed, human capital and structural capital are used as components of intellectual capital and return on assets (ROA), return on equity (ROE) and Earning Per Share (EPS) indexes are used as criteria of financial performance. The value of three performance measures i.e. Return on Equity (ROE), Return on Assets (ROA), and Earning Per Share (EPS) are obtained from the annual reports of respective banks, whereas the values of VAIC and Value added are computed using appropriate formula and the ranking is made. The companies having highest value is ranked 1, next highest is ranked as 2, and so on. Next, a bar chart is prepared using the computed values of HCE, SCE, CEE representing various components of intellectual capital efficiency which constitute the VAIC. Lastly for testing the relation between various performance measures and IC and its components Pearson correlation coefficient is computed. Findings: It is seen that while VA has significant relationship with EPS, VAIC™ is more significantly associated with ROA. Results also show that two major components of VAIC™ i.e. (HCE and CEE) have significant association with financial...
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...companies 2. A study on “why companies should go for outsourcing” 3. Effectiveness of advertising on real estate sector 4. Study on consumer expectations and perceptions towards consumer loans 5. Workers attrition rate at hotel industry is increasing. Study regarding this issue 6. Attrition rates at different sectors 7. Effectiveness and scope of employee referrals in the process of talent sourcing 8. Study of training needs across different industries 9. Study on creation of luxury brand 10. Strategies used to build successful Internet based customer services 11. Measuring the effectiveness of retail banking of a nationalised bank compared to a MNC 12. Conspicuous consumption 13. Study of awareness and acceptibility of UPVC windows and door systems 14. Opportunities of Financing the NANO’s in Bangalore 15. Changing trends in FMCG industry in India 16. A study of best HR practices in service industry 17. Fundamental analysis of Indian telecom companies 18. Study of consumer behaviour in automobile industry 19. customer buying behaviour towards insurance products 20. Promotion strategies followed in Insurance sector 21. Study on changing consumer preference towards organised retailing from un-organised retailing 22. study on “impact of advertising in B2B marketing” 23. Distribution network & general insurance industry 24. A study on distribution channels in aluminium industry 25. Study on strategies for promoting retailers’ brands 26. Study of operations &...
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...companies 2. A study on "why companies should go for outsourcing" 3. Effectiveness of advertising on real estate sector 4. Study on consumer expectations and perceptions towards consumer loans 5. Workers attrition rate at hotel industry is increasing. Study regarding this issue 6. Attrition rates at different sectors 7. Effectiveness and scope of employee referrals in the process of talent sourcing 8. Study of training needs across different industries 9. Study on creation of luxury brand 10. Strategies used to build successful Internet based customer services 11. Measuring the effectiveness of retail banking of a nationalised bank compared to a MNC 12. Conspicuous consumption 13. Study of awareness and acceptibility of UPVC windows and door systems 14. Opportunities of Financing the NANO's in Bangalore 15. Changing trends in FMCG industry in India 16. A study of best HR practices in service industry 17. Fundamental analysis of Indian telecom companies 18. Study of consumer behaviour in automobile industry 19. customer buying behaviour towards insurance products 20. Promotion strategies followed in Insurance sector 21. Study on changing consumer preference towards organised retailing from un-organised retailing 22. study on "impact of advertising in B2B marketing" 23. Distribution network & general insurance industry 24. A study on distribution channels in aluminium industry 25. Study on strategies for promoting retailers' brands 26. Study of operations & marketing...
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...A MODEL FOR RISK BASED PRICING FOR INFRASTRUCTURE FINANCING BY BANKS By Prof Ajay Pathak* Infrastructure development is the new buzzword for India Inc.Policy makers are putting emphasis on development of roads, ports, airports, and urban infrastructure to facilitate growth. The government is opening up private investment in the infrastructure through Special Purpose Vehicles (SPV). With the changing regulations, however, infrastructure finance so far has been untouched by the commercial banks. but this is the new avenue to gear up their fund based activities. With increased exposure in infrastructure, banks need to be cautious about the credit risks inherent in the projects with long gestation periods. It was found that infrastructure development has a high correlation with the macroeconomic factors like GDP growth rate of the country. Such macroeconomic trends actually influence income generation and timely recovery of the credit extended. So for greater risk sensitivity a model pricing mechanism has been developed to address the macroeconomic changes in the economy for better risk management. It is an obvious fact that risk is inherent in every action. In extending credit to other parties one of the main risks of the Bank is Credit Risk. The possibility of losses associated with diminution in the credit quality of borrowers/counter parties is called credit risk. In a simpler way, credit risk may be defined...
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...COMMERCIAL BANKS PRESENTED BY Gurlovleen Kaur ABSTRACT Commercial banks form the most important part of Indian financial landscape in terms of their role in channeling credit to the commercial sector and facilitating the process of financial inclusion. In the era of global competition, performance is the key factor for any subject, especially in banking. The Indian banking industry is made up of the Indian public sector banks and private sector banks. In this project an effort has been made to evaluate the financial performance of commercial banks by using key performance indicators as a benchmark, generally the financial performance of bank is evaluated by working out a number of ratios depending upon the data. This study has made use of five financial parameters ,i.e. ,Capital to Risk Weighted Assets Ratio( CRAR) ,Return on Assets ( ROA), Non Performing Asset (NPA),Net interest Margin (NIM), Profit Per Employee( PPE), as these are generally accepted ratios to evaluate the performance of banks ,in order of their performance. Research plan includes decision on data sources, research approaches, research instrument, sampling plan and contact method. The present study is based on secondary data. The data is collected through various journals, studies, websites and publications of banks. The collected data is analyzed to reach at conclusions regarding the various issues related to performance of commercial banks. In this study the 10 commercial banks are selected...
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...A Comparative Analysis Of The Effectiveness Of Three Solvency Management Models By Enyi, Patrick Enyi Ph.D, MBA, B.Sc, ACA, ACCA, MFP, RFS. Fellow, American Academy of Financial Management (AAFM) Member, American Accounting Association (AAA) Head, Department of Accounting, Covenant University, Ota, Nigeria A Comparative Analysis Of The Effectiveness Of Three Solvency Management Models Abstract The introduction of the Altman’s Z-score model in 1983 and much recently the Enyi’s Relative Solvency Ratio model in 2005 has divergently provided financial analysts with alternative methods of analyzing corporate solvency which hitherto was exclusively done using the traditional historical record based ratio analysis, with particular reference to the current ratio. To test the relevance and effectiveness of the three models, real life performance data were extracted from the annual reports of 7 quoted companies, analyzed using the three models and the results compared to show the strengths and weaknesses of each. The result revealed that the current ratio and the Z-score models suffer from many limitations including imprecision while the Relative Solvency Ratio combines the capability of an effective indicator with the precision required of a true predictor. Keywords: Solvency, Liquidity, Ratio Analysis, Bankruptcy, Performance, Relative Solvency, Working Capital, Current Ratio, Current Assets, Balance Sheet 1. Introduction It is a proven fact over and throughout...
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...CHAPTER-I 1 INTRODUCTION 1.1 Introduction of bank Bank is a financial institution which deals with other’s people money i.e. money given by the depositors.The establishment authorized by a government to accept deopsits,pay interests,clear checks,make loans,act as an intermediary in financial transactions,and provide other financial services to the customers.The roots of banking can be treated to the earliest civilizations.The Egyptians and early societies of the Middle East developed the prototype upon which modern banking is based.Agriculture commodities were stored in granaries operated by the government, and the records of deopsits and withdrawls were manitained. The name “bank” comes from the italian word ‘banco’.A banco was a table covered in green cloth where moneylenders completed their transactions in the marketplace.Those are preety humble beginnings for a major industry.Banking is a key component of the global financial system. Most large banks are now global in nature, with offices in all key financial centres, from New York to London to Hong Kong and have the power to influence the economies of countries around the world no matter how large, as seen during the recent financial crisis. According to Robert Frost, ‘‘bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins . Introduction to the Indian Banking industry in historical prespective. 1.2 Indian Banking in historical...
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...CAPITAL OVERVIEW The purpose of the article is to examine the result of intellectual capital towards financial aspects of organizational performance and what it constitutes of its performance indicator. Influence of intellectual capital on Hong Kong stock exchange, Australian financial sector, hotel industry, India pharmaceutical industry and its general impact on firms are discussed in this essay. The most famous methodology used was the value added intellectual coefficient policy, where regression models were made to inspect the association between IC and the corporate financial performance indicator. The results were positive and suggested that IC, was positively connected with success of productions by VAIC methodology. To be precise, structural capital was found to be the main component of IC. INTRODUCTION It has been acknowledged by different scholars that universally the financial sector is converting into knowledge and fact based and the value of financial sector is acquired from intellectual capital than just from physical capital. Although the significance of intellectual capital is repeatedly expanding but companies are confronting measurement difficulties. The growing gap was noticed among market price and the book price of numerous organizations which attracted consideration towards examining the worth absent from records. Various definitions of IC are given by different economist, academics and practitioners. Still not even a single meaning of IC has...
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...Institutions in Bhutan Dil Bahadur Rahut* Iván Velásquez Castellanos** Pravakar Sahoo*** Abstract The Kingdom of Bhutan is a small landlocked country in South Asia, located in the eastern Himalayas, and bordered by India and China. Bhutan is a small and fragile economy with a population of about 687,000. Nevertheless, its banking system plays an essential role in the growth and development of the country. This paper analyzes the financial performance, the development and growth of bank and non-bank financial institutions of Bhutan for the period 19992008 using both traditional and data envelopment analysis (DEA). The DEA analysis shows that financial institutions in are efficient and Bhutan National Bank has been the most efficient one. Overall, the paper finds that the ROE of the financial institutions in Bhutan are comparable to the international banks. Key words: Financial institution, performance, loan, deposit, net income, Bhutan. JEL Classification: G20; G21; G28; O16 *Chief, Research, Planning and Monitoring Department, Bank of Bhutan, Bhutan. Email: dilbhutan@yahoo.com **Bolivia Country Programme Coordinator, Konrad Adenauer Stiftung (KAS). Email: velasquezivanomar@yahoo.com ***Associate Professor, Institute of Economic Growth, New Delhi, India and Visiting Research Fellow, Institute of Developing Economies, Japan. Email: pravakarfirst@yahoo.com The Institute of Developing Economies (IDE) is a semigovernmental, nonpartisan, nonprofit research institute...
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