Financial economists, risk managers and investment professionals need to estimate the value of an investment at some future horizon. The financial factors used to estimate expected returns are important for successful investment decisions. Investors and portfolio managers can evaluate their portfolios by comparing their portfolio returns to that of benchmark portfolios. Many of the national equity markets in Latin America (Brazil and Mexico) and Asia (China, Korea and Taiwan) have market capitalizations far in excess of the size of some of the smaller equity markets in the developed countries. Several empirical studies that tested for factors that might influence equity returns indicate that domestic factors, such as the level of domestic interest rates and expected changes in domestic inflation, as opposed to international monetary variables, had the greatest effect on national equity returns. To construct an efficiently diversified international portfolio of stocks, one must estimate the expected return and the variance of returns for each security in the investment set plus the pair-wise correlation structure. Industrial structure of a country is important in explaining a significant part of the correlation structure of international equity index returns as industry factors help a larger portion of stock market variability than exchange rate. There is a need to educate the investors on the issues related to the benefits of international diversification, the drivers and consequences of correlations among global equity markets, and the impact of currency movements on returns of global portfolios.
In the first paper, “Ownership Structure and Operating Performance of IPOs in India”, the authors, Shikha Bhatia and Balwinder Singh, attempt to examine the operating performance of IPOs in India for a period of five years subsequent to the issue, using the Wilcoxon signed rank test and multivariate regression analysis. The paper sheds light on the relationship between managerial ownership and firm performance in the post-issue period. The results of the study show a decline in post-issue percentage of median operating performance in terms of profitability, output, efficiency, leverage and capital expenditure measures. The findings also reveal that the Indian IPOs experience a decline in their operating performance for five years following the issue. Further, the study claims that there is no significant effect of level of firm ownership after the IPO on the subsequent operating performance.
In the second paper, “Dual Long Memory in Stock Market Prices: New Evidence Based on Bull and Bear Markets”, the authors, Siow-Hooi Tan, Hway-Boon Ong and Roy-Wye-Leong Khong, examine the dual long memory properties in Malaysian stock market during the bull and bear periods by using both semi-parametric and ARFIMA-FIGARCH models for the period, 1993:10 to 2009:12. The authors opine that while there is no evidence of long range dependence in return series, there is a slowly decaying component in stock volatilities in all the bear periods and three out of five bull periods under study. The study highlights that the presence of long memory provides evidence against the efficient market hypothesis and thus offers arbitrage opportunities to reap excess profits in stock market.
In the third paper, “Is Beta Dead?—Reevaluation of Equity Returns in the US Diversified Financial Sector”, the authors, Ramesh Mohan, Huong Nguyen and Anup Nandialath, study the relation between equity returns and fundamental variables by employing multifactor asset pricing models for the period, 2006-2011. The main findings demonstrate that there exists a significant relationship between equity returns and market value, book-to-market equity, earnings yield, leverage factors, sales-to-price ratio, book value per share and earnings per share. The study highlights that these variables can serve as a proxy for risks and some share a joint role in determining equity returns of financial firms.
In the last paper, “A Tale of Two Macroeconomic Issues: Public Spending and Households’ Preferences”, the author, Girish Kumar Paliwal, examines how political/bureaucratic corruption in India affects households’ preferences in a typical economy dominated by the informal sector by using representative households’ utility function. The paper sheds light on the households’ preferences of consumption-leisure, consumption-saving and consumption-demand of real balances decisions. The main findings demonstrate that the households’ decisions of consumption-saving, consumption-leisure and consumption-demand of real balances are not affected by public spending on consumption, government transfer, political/bureaucratic corruption/embezzlement in public spending on consumption and political/bureaucratic corruption/embezzlement in government transfer.
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.
