The present issue comprises three research papers. The first paper, “The Quantile
Regression Approach to Analysis of Dynamic Interaction Between Exchange
Rate and Stock Returns in Emerging Markets: Case of BRIC Nations”, by Shekhar
Mishra, examines the dynamic interaction between stock returns and exchange rate
changes in the emerging BRIC (Brazil, Russia, India and China) countries. The study
examines the portfolio balance effect where stock returns and exchange rate changes are
expected to be negatively related. Since under non-normality conditions and heterogeneous
conditional distribution, estimation under Ordinary Least Squares (OLS) method may be
biased and not much favorable, quantile regression model is adopted to analyze the
relationship between stock returns and exchange rate changes. The estimation shows
similar patterns with significantly negative coefficients obtained from different quantile
functions for Brazil, Russia and India. However, for China, the coefficients are not so
significantly negative. The negative coefficients indicate adherence of markets to portfolio
balance effect. However, the coefficients can vary according to changing market
conditions.
The second paper, “On the Probability of Maximum Severity of Ruin for a Classical
and Renewal Risk Model”, by Palash Ranjan Das and Gopal Govindasamy, engages ruin
theory as a mathematical basis for quantifying the financial risks in insurance industry.
Considering a classical risk model with dividend barrier, it is calibrated to obtain the
maximum probability of ruin when the claim amount distribution is either exponential
or Erlangian. It is to be noted that for numerical evaluation, the premium loading factor
is taken to be 20% in both the cases. In order to ensure fair comparison, exponential and
Erlangian parameters have been chosen in such a way that their mean and the expected
total claims are same for both the distributions over a given time interval. Ultimately, it
is generalized that the classical risk model by considering a renewal risk model can be used
to find an expression for the maximum severity of ruin in the insurance industry.
The last paper, “Hedging Practices Used by Indian Companies in Managing Foreign
Exchange Risk”, by Hiren Maniar, attempts to evaluate select 50 export-oriented Indian
companies in managing their foreign exchange exposures. The study emphasizes the
current hedging practices adopted by the export-oriented Indian companies on various
parameters like hedging coverage, hedging policy decision, hedging tenure, hedging
instruments, number of currencies for hedging, hedging approach and involvement,
hedging strategies execution, and hedging benefits. The study observed that foreign
exchange exposure management is a multi-stage process encompassing identification,
6 The IUP Journal of Financial Risk Management, Vol. XIII, No. 1, 2016
quantification, monitoring, and management with diverse hedging tenures in alignment
with the firms’ objectives of foreign exchange exposure management. The study also
recommends the use of diverse hedging strategies like range bound, multi-stage and crosscurrency
hedging, matching of hedging tenure with actual receivables, optimum hedging
ratio, hedging execution, and systematic approach towards optimum hedging practices.
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.
