|
Competition
and Market Power in the Indian Banking Industry in the Post-Reform
Scenario
-
- Satish Verma and Rohit
Saini
This
study focuses on the level of competition and market power
in the Indian banking industry. Using an unbalanced panel
for 15 years from 1992-2006, we find that Indian banking industry
is characterized by a relatively higher degree of competition
compared to that of its counterparts particularly in the European
countries. The average mark-up over marginal cost has been
10% during the study period. We also find that the foreign
banks charged nearly twice the mark-up as compared to that
charged by Public and Domestic Private Banks. Further, the
average mark-up level is found to decline substantially from
20% at the beginning of reforms to 5% in 2006, reflecting
a sharp decline in market power with the banks during the
period under consideration.
©
2008 IUP . All Rights Reserved.
Macroeconomic
Determinants of Asset Quality of Indian Public Sector Banks:
A Recursive VAR Approach
-- Basabi
Bhattacharya and Tanima Niyogi Sinha Roy
This
paper undertakes a Macro Prudential Analysis (MPA) of credit
risk, the predominant risk category of Indian Public Sector
Banks (PSBs). Assuming bank-specific shocks to be nil at the
micro level, the paper employs a recursive Vector Auto-Regression
(VAR) methodology to examine the transmission of shocks from
major macroeconomic variables on the default rate of banks.
The VAR model is applied to monthly data from the period 1994-2003.
This is the first attempt in the Indian context that studies
the links between asset quality and macroeconomic shocks using
the VAR model. There is no evidence of cyclicality and procyclicality
at one month lag as revealed by Granger causality tests. However
Impulse Response Functions reveal the existence of cyclical
and procyclical patterns over two months. Further shocks to
exchange rate and monetary policy significantly affect bank
asset quality. The implication of this study is that with
the forthcoming Fuller Capital Account Convertibility (FCAC),
banking sector in India is likely to be under increased stress
in view of the exchange rate volatility and consequent rise
in interest rates. In this scenario monetary policy emerges
as an important precondition for banking stability. It may
be suggested that the authorities need to take a balanced
overview of financial stability in aggregate rather than focusing
on price stability alone.
©
2008 IUP . All Rights Reserved.
Operational
Efficiency of Foreign Banks Operating in India: A
Non-Parametric Model
-- V
K Shobhana and G Shanthi
Liberalization
of the Indian financial sector has thrown open the doors for
Foreign Banks (FBs) to spread their wings far and wide. This
has resulted in an increasingly competitive environment in
the Indian banking industry. Consequently, many FBs, with
their financial muscle power, have attained commanding heights
in India. This paper assesses the operational efficiency of
FBs in India using the data for the period 1996-97 to 2004-05.
The authors use ANOVA (Analysis of Variance) to find that
there is no significant relationship between operational efficiency
and variables such as size of assets, branch network and stall
strength.
©
2008 IUP . All Rights Reserved.
Financial
Performance of Banks in India
-- Harish
Kumar Singla
The
present study was undertaken to examine and understand how
financial management plays a crucial role in the growth of
banking. It is concerned with examining the profitability
position of the selected sixteen banks (BANKEX-based) for
a period of five years (2000-01 to 2006-2007). The study reveals
that the profitability position was reasonable during the
period of study when compared with the previous years. Return
on Investment proved that the overall profitability, and the
position of selected banks was sustained at a moderate rate.
With respect to debt equity position, it was evident that
the companies were maintaining 1:1 ratio, though at one point
of time it was very high. Interest coverage ratio was continuously
increasing, which indicated the company's ability to meet
the interest obligations. Capital adequacy ratio was constant
over a period of time. During the study period, it was observed
that the return on net worth had a negative correlation with
the debt equity ratio. Interest income to working funds also
had a negative association with interest coverage ratio and
the Non-Performing Assets (NPA) to net advances was negatively
correlated with interest coverage ratio.
©
2008 IUP . All Rights Reserved.
Customer
Perception of E-Banking Services of Indian Banks: Some Survey
Evidence
-- R
K Uppal
In
the post-LPG (Liberalization, Privatization and Globalization)
era and Information Technology (IT) era, transformation in
Indian banks is taking place with different parameters and
the contours of banking services are dynamically altering
the face of banking, as banks are stepping towards e-banking
from traditional banking. On the basis of five-point likert-type
scale, this paper empirically analyzes the quality of e-banking
services in the changing environment. With different statistical
tools such as weighted average method and ranking, the paper
concludes that most of the customers of e-banks are satisfied
with the different e-channels and their services, but the
lack of awareness is a major obstacle in the spread of e-banking
services. The paper also suggests some measures to make e-banking
services more effective in the future.
©
2008 IUP . All Rights Reserved.
| 
