This
issue focuses on four diverse areas which are considered important
in the derivatives market valuation. The first paper, "Valuation
of Credit Contingent Options with Applications to Quanto CDS",
looks at the valuation of credit contingent asset or options
by modeling the correlation between asset price and credit
default. One of the key factors in the valuation of credit
contingent derivatives contracts is the correlation between
credit event and underlying asset in the derivatives contract.
Valuation of credit contingent derivatives requires three
factor models: one for interest rate, another for credit default,
and the third for asset price. This paper presents three approaches
in modeling asset price and default correlation.
The
second paper, "Mortgage-Backed Securities and Financial
Innovation Experience of Malaysia", compares the attractiveness
of two instruments of the National Mortgage Corporation of
Malaysia very closely: Residential Mortgage Backed Securities
(RMBS) to the Conventional Corporate Bonds and Private Labelled
Asset-Backed Securities (PLABS). The objective of this paper
is to assess the attractiveness of RMBS of Cagamas to the
investor relative to the Conventional Corporate Bands and
PLABS.
The
third paper, "Multi-Currency Local Volatility Model",
tries to combine exotic or hybrid options local volatility
with stochastic interest rates to model these hybrid options
for market relevant valuation. In case the volatility of the
underlying is a deterministic function of time and the underlying
price, the new local volatility can be expressed in terms
of the local volatility with deterministic rates together
with a bias which is the covariance between the spot rates
and the logarithm of the underlying price.
The
fourth paper, "Impact of Futures Trading Activity on
Stock Price Volatility of NSE Nifty Stock Index", examines
the effect of futures trading activity on the jump volatility
of the stock market by taking India's NSE Nifty stock index.
This study examines whether activities in the futures market
and other relevant factors have Granger-caused jump volatility
of stock prices. The macroeconomic variable used in the study
are volatility of the term structure of interest rates; volatility
of the NSE Junior index (proxy index with no futures trading);
volatility in the risk premium; volatility of the inflation
rate; and volatility of the industrial production index.
Automated Teller Machines (ATMs): The Changing Face of Banking in India
Bank Management
Information and communication technology has changed the way in which banks provide services to its customers. These days the customers are able to perform their routine banking transactions without even entering the bank premises. ATM is one such development in recent years, which provides remote banking services all over the world, including India. This paper analyzes the development of this self-service banking in India based on the secondary data.
The Information and Communication Technology (ICT) is playing a very important role in the progress and advancement in almost all walks of life. The deregulated environment has provided an opportunity to restructure the means and methods of delivery of services in many areas, including the banking sector. The ICT has been a focused issue in the past two decades in Indian banking. In fact, ICTs are enabling the banks to change the way in which they are functioning. Improved customer service has become very important for the very survival and growth of banking sector in the reforms era. The technological advancements, deregulations, and intense competition due to the entry of private sector and foreign banks have altered the face of banking from one of mere intermediation to one of provider of quick, efficient and customer-friendly services. With the introduction and adoption of ICT in the banking sector, the customers are fast moving away from the traditional branch banking system to the convenient and comfort of virtual banking. The most important virtual banking services are phone banking, mobile banking, Internet banking and ATM banking. These electronic channels have enhanced the delivery of banking services accurately and efficiently to the customers. The ATMs are an important part of a bank’s alternative channel to reach the customers, to showcase products and services and to create brand awareness. This is reflected in the increase in the number of ATMs all over the world. ATM is one of the most widely used remote banking services all over the world, including India. This paper analyzes the growth of ATMs of different bank groups in India.
International Scenario
If ATMs are largely available over geographically dispersed areas, the benefit from using an ATM will increase as customers will be able to access their bank accounts from any geographic location. This would imply that the value of an ATM network increases with the number of available ATM locations, and the value of a bank network to a customer will be determined in part by the final network size of the banking system. The statistical information on the growth of branches and ATM network in select countries.
Indian Scenario
The financial services industry in India has witnessed a phenomenal growth, diversification and specialization since the initiation of financial sector reforms in 1991. Greater customer orientation is the only way to retain customer loyalty and withstand competition in the liberalized world. In a market-driven strategy of development, customer preference is of paramount importance in any economy. Gone are the days when customers used to come to the doorsteps of banks. Now the banks are required to chase the customers; only those banks which are customercentric and extremely focused on the needs of their clients can succeed in their business today.
