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Modeling
`Early Warning System' for Off-site Surveillance of Commercial
Banks
-- Amit Kulkarni
This
paper intends to develop an Early Warning System (EWS) for
predicting the future capital adequacy of commercial banks.
Using the financial data for Indian public sector and private
sector banks, binary choice models are estimated and bank-wise
probability of future capital inadequacy (one year prior to
the actual outcome) is generated. Perhaps not surprisingly,
a number of banking indicators are found to be good short-term
predictors of capital ratios. The EWS models developed in
this paper could identify capital inadequate banks with a
reasonable degree of accuracy. Thus, our models could be potentially
useful as effective EWS for off-site surveillance of commercial
banks.
©
2006 IUP . All Rights Reserved.
Commercial Bank Lending Rates and the Real Sector of the Nigerian
Economy
-- Tokunbo Simbowale
Osinubi and Akin-Olusoji Akinyele
The
financial sector in a typical economy is saddled with the
primary responsibilities of financial resource mobilization
and intermediation. It engages in the redirection of funds
from surplus spending units to deficit spending units. In
other words, the financial sector provides funds used as capital
input by producers in other sectors of the economy as well
as by final consumers. The impact of the delivery of these
financial services in the form of working capital to the producers
is felt in the short run. Thus, the financial sector, especially
the commercial banking system, is important in the smooth
functioning of the real sector of the economy. The real sector
of the economy forms the main driving force of the economy.
It is the engine of economic growth and development. In spite
of its importance, however, the performance of the real sector
in terms of production and growth rate has been low. Its contribution
to GDP, hovering between 45% and 51%, has not made any remarkable
increase over the years (Central Bank of Nigeria, 2000). Essentially,
the real sector relies on the banking system for working capital
with which to purchase inputs locally and abroad. Increases
in bank lending rates, therefore, compound the problem of
rising cost of working capital, thereby increasing the significance
of cost of funds in the performance of the sector. This suggests
the need, using secondarily sourced time-series data from
1970 to 2003, to carry out an in-depth study of commercial
bank lending rates and its impact on the real sector of the
economy. The study is, therefore, important as it is expected
to provide useful insights into the probable cause of slow
output growth and resource unemployment in the real sector
of the Nigerian economy.
©
2006 IUP . All Rights Reserved.
Evaluating
Performance of Banks through Camel Model: A Case Study of
SBI and ICICI
-- B S Bodla
and Richa Verma
The
present supervisory system in banking sector is a substantial
improvement over the earlier system in terms of frequency,
coverage and focus as also the tools employed. Nearly one-half
of the Basle Core Principles for Effective Banking Supervision
has already been adhered to and the remaining is at a stage
of implementation. Two Supervisory Rating Models, based on
CAMELS and CACS factors for rating of the Indian Commercial
Banks and Foreign Banks operating in India respectively, have
been worked out on the lines recommended by the Padmanabhan
Working Group (1995). These ratings would enable the Reserve
Bank to identify the banks whose condition warrants special
supervisory attention. This paper studies the performance
of SBI and ICICI through CAMEL Model for the period 2000-01
to 2004-05. It is found that SBI has an edge over its counterpart
ICICI in terms of Capital Adequacy. However, the vice versa
is true regarding assets quality, earning quality and management
quality. The liquidity position of both the banks is sound
and does not differ significantly.
©
2006 IUP . All Rights Reserved.
Barriers
in Mobile Banking Adoption in India
-- Abhay Jain and B S Hundal
Rapid
changes in the financial services environmentincreased competition
by new players, product innovations, globalization and technological
advancementhave led to a market situation where battle for
customers has become intense. In order to rise up to the challenges,
service providers are even more interested to enhance their
understanding of consumer behavior patterns. This paper examines
the forces that can act as barriers in mobile banking service
adoption. A quantitative survey sheds more light on this research
issue. The data was collected from a survey in the Northern
region of India and includes 330 respondents.
©
2006 IUP . All Rights Reserved.
Funds
Management in the Central Cooperative Banks of Punjab An Analysis
of Financial Margin
-- Fulbag
Singh and Balwinder Singh
In
a banking institution, the most important function is the
management of the funds. The efficiency with which the funds
are managed is reflected through the financial margin of the
bank, which, in turn, is influenced by many factors. The ratio
of own funds to working funds, the ratio of low cost deposits
to total deposits, the ratio of overdues to total loans, the
ratio of recovery to demand, the ratio of agriculture loan
to total loan and the credit to deposit ratio are some of
the factors which are identified for the present study. This
paper attempts to estimate the impact of the identified variables
on the financial margin of the Central Cooperative Banks in
Punjab with the help of correlation and multiple stepwise
regression approach. The ratio of own funds to working funds
and the ratio of recovery to demand are observed to be having
significant influence on financial margin, whereas the ratio
of overdues to total loans is having a negative one. A high
use of own funds and timely recovery of previous loans, as
a source for funding further loans by the bank, help the financial
margin in a positive way.
©
2006 IUP . All Rights Reserved.
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