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Interconnections among banks are an essential feature of the banking system as it helps in an effective payment system and liquidity management. However, it can be a nightmare during a crisis when these interconnections can act as contagion channels. Therefore, it becomes essentially important to identify good links (non-contagious channels) and bad links (contagious channels).

The article estimated systemic risk using quantile regression through the ΔCoVaR approach. The interconnected phenomenon among banks has been analyzed through Granger causality, and the systemic network properties are evaluated. The authors have developed a fixed effect panel regression model to predict interconnectedness. Profitability-adjusted systemic index is framed to identify good (non-contagious) or bad (contagious) channels. The authors further developed a logit model to find the probability of a link being non-contagious. The study sample includes 36 listed Indian banks for the period 2012 to 2018.

The study indicated interconnections increased drastically during the Indian non-performing asset crisis. The study highlighted that contagion channels are higher than non-contagious channels for the studied periods. Interbank bad distance dominates good distance, highlighting the systemic importance of banking network. It is also found that network characteristics can act as an indicator of a crisis.

The study is the first to differentiate the systemic contagious and non-contagious channels in the interbank network. The uniqueness also lies in developing the normalized systemic index, where systemic risk is adjusted to profitability.

This paper has used account-level data of corporate and retail borrowers, assessed their credit risk through the risk-neutral principle and examined its implication on loan pricing.

It derives the capital charge and credit risk-premium for expected and unexpected losses through a risk-neutral approach. It estimates the risk-adjusted return on capital as the pricing principle for loans. Using GMM regression, the article has assessed the determinants of risk-based pricing.

It has been found that risk-premium is not reflected in the current loan pricing policy as per Basel II norms. However, the GMM estimation on RAROC can price risk premium and probability of default, LGD, risk weight, bank beta and capital adequacy, which are the prime determinants of loan pricing. The average RAROC for retail loans is more than that of corporate loans despite the same level of risk capital requirement for both categories of loans. The robustness tests indicate that the RAROC method of loan pricing and its determinants are consistent against the time and type of borrowers.

The RAROC method of pricing effectively assesses the inherent risk associated with loans. Though the empirical findings are confined to the sample bank, the model can be used for any bank implementing the Basel principle of risk and capital assessments.

The article has developed and validated the model for estimating RAROC, as per Basel II guidelines, for loan pricing that any bank can use.

It has developed the risk-based loan pricing model for retail and corporate borrowers. It has significant practical utility for banks to manage their risk, reduce their losses and productively utilise the public deposits for societal developments.

The article empirically validated the risk-neutral pricing principle using a unique 1,520 retail and corporate borrowers dataset.

The current study aims to analyze the linkage among bank competition, liquidity and loan price in an interconnected bank network system.

The study employs the Lerner index to estimate bank power; Granger non-causality for estimating competition, liquidity and loan price network structure; principal component for developing competition network index, liquidity network index and price network index; and panel VAR and LASSO-VAR for analyzing the dynamics of interactive network effect. Current work considers 33 Indian banks, and the duration of the study is from 2010 to 2020.

Network structures are concentrated during the economic upcycle and dispersed during the economic downcycle. A significant interaction among bank competition, liquidity and loan price networks exists in the Indian banking system.

The study meaningfully contributes to the existing literature by adding new insights concerning the interrelationship between bank competition, loan price and bank liquidity networks. While enhancing competition in the banking system, the regulator should also pay attention toward making liquidity provisions. The interactive network framework provides direction to the regulator to formulate appropriate policies for managing competition and liquidity while ensuring the solvency and stability of the banking system.

The study contributes to the limited literature concerning interactive relationship among bank competition, liquidity and loan price in the Indian banks.

This study aims to analyse the systemic risk emitted by all publicly listed commercial banks in a key emerging economy, India.

The study makes use of the Tobias and Brunnermeier (2016) estimator to quantify the systemic risk (ΔCoVaR) that banks contribute to the system. The methodology addresses a classification problem based on the probability that a particular bank will emit high systemic risk or moderate systemic risk. The study applies machine learning models such as logistic regression, random forest (RF), neural networks and gradient boosting machine (GBM) and addresses the issue of imbalanced data sets to investigate bank’s balance sheet features and bank’s stock features which may potentially determine the factors of systemic risk emission.

The study reports that across various performance matrices, the authors find that two specifications are preferred: RF and GBM. The study identifies lag of the estimator of systemic risk, stock beta, stock volatility and return on equity as important features to explain emission of systemic risk.

The findings will help banks and regulators with the key features that can be used to formulate the policy decisions.

This study contributes to the existing literature by suggesting classification algorithms that can be used to model the probability of systemic risk emission in a classification problem setting. Further, the study identifies the features responsible for the likelihood of systemic risk.

The purpose of this paper is to investigate long-run commonality in liquidity using multiple proxies computed from limited order book data of NIFTY50 stocks. The findings indicate the existence of systematic liquidity or commonality on NIFTY50 market and comprising industries.

The sample comprises all intraday transactions corresponding to NIFTY 50 stocks for April 2015. The study runs firm by firm time series regressions to test the concept of long-run commonality, while controlling other effects.

Strong evidence is found in support of long-run commonality across three liquidity measures. On the basis of significance (10%) of long-run commonality beta (β_LR), the strength of long-run commonality is found to be highest in natural resources and infrastructure sector. Portfolios having greater exposure to these sectors will face diversification risk to a great extent.

Knowledge of long-run commonality helps portfolio managers in formulating diversification strategies and reshuffling the portfolio over the period. Commonality risk being non-diversifiable is a policy concern for regulators and central bankers. Its empirical evidence will assist in managing exchange organization and thus preventing market crashes because of sudden liquidity evaporation.

Although there are recent studies documenting commonality in short run, little empirical work has been done on commonality in the long run and in emerging markets such as India. This research contributes to the literature by testing concept of commonality in long-run on NIFTY50 stocks using detailed transaction data from National Stock Exchange.

The purpose of this paper is to examine the influence of ownership structure and dividend payouts over firm’s profitability, valuation and idiosyncratic risk. The authors further investigate if corporate performance is sector dependent.

The study employs signaling and bankruptcy theories to evaluate the influence of ownership structure and dividend payout over a firm’s corporate performance. The authors use a panel regression approach to measure the performance of family owned firms against that of widely held firms.

The study confines to firms operating out of emerging markets. The results show that family owned firms are dominant with concentrated ownership. The management pays lower dividend leading to lower valuation and higher idiosyncratic risk. The study further illustrates that family ownership concentration and family control both influence firm performance and level of risk. The findings indicate that information asymmetry and under diversification lead to increased idiosyncratic risk, resulting in the erosion of firm’s value. Results also confirm that firms paying regular dividends are less risky and, hence, command a valuation premium.

The evidence supports the proposition that information asymmetry plays a significant role in explaining dividend payouts pattern and related impacts on corporate performance. The originality of the paper lies in factoring idiosyncratic risk while explaining profitability and related valuation among emerging market firms.

Financial sector reform measures, which were initiated in 1991, have provided some degree of maturity and integration of different segments of India's financial markets. The purpose of this paper is to articulate the impact of financial sector reform measures on integration of various segments of financial markets in India.

The paper surveys various methodologies for measurement of financial integration and uses the recently developed technique of co‐integration in a VAR framework to assess the extent of integration of various segments of India's financial markets.

The paper concludes that the financial market integration is inconclusive in India. Only a few segments of money market, Gilt market and foreign exchange market are integrated. Interest rate parity does not hold in India's case, which indicates poor evidence in support of international integration of domestic financial markets. Similarly, the analysis of the relationship between domestic saving and domestic investment does not support international integration. The study of co‐integration of Nasdaq and Bombay sensitive index (BSE), also revealed absence of international integration.

Owing to non‐availability of time series data, the paper could not consider the mutual fund market, pension market and various derivatives markets in the overall process of assessment of financial integration. However, the impact on the findings is minimal, as these markets are not so far developed in India.

The findings have significant practical implications particularly in the formulation of policies on management and interventions in the money market, foreign exchange and equity markets and in the overall formulation of monetary policy for the economy.

This paper presents a quite comprehensive research study on financial integration in India and is original, particularly in the area of application of the co‐integration technique for assessment of financial integration.

During the last two decades there have been significant policy changes in the banking system, primarily in the emerging market economies. These changes have impacted the competitive structure of banking. In India, since 1991, gradual reform measures have been initiated to improve efficiency, productivity, competition and stability of the banking sector. There is a requirement for a formal approach to examine level of competition in Indian banking sector after the liberalization. This paper aims to address this issue.

The article applied the conjectural variation method using 2‐stage least square for assessing the degree of competition in the Indian banking system.

The paper finds that competitive condition in the Indian banking sector has been improving 1996. However, big banks with market share more than 1 per cent have been exercising some degree of price mark‐up over their marginal cost.

Due to the paucity of data competition at the regional level is not analysed which is a limitation of the article.

Analysis of competition allows the policy formulators to design proper liberalization measures to ensure greater competition in the banking sector so as to prevent any cartel formation.

Since the Indian banking sector is monopolistically competitive, the article advocates for more liberalization measures to improve competition in the Indian banking sector.

To assess competition the article has covered 53 banks involving more than 90 per cent banking sector assets of the country. Through Lerner Index the article has found that big banks are able to charge a price which is about 30 per cent more than their marginal cost. The conjectural variation method is a monopolistic market structure prevailing in the Indian banking sector.

Purpose. This chapter discusses the challenges and different strategies to increase skill development for the future workforce.

Methodology. Multiple sources on the topic were studied and reviewed in this chapter. The idea of skill and its development is discussed in the literature review.

Findings. Different nations’ governments have promoted human capital development by providing up-skilling and retraining programs to balance supply and demand. Skills gaps need to be brought to the attention of stakeholders, such as governments, businesses, and the educational system. Teachers, employers, and other stakeholders need to develop strategies and action plans to ensure that the skills gaps are appropriately identified and adequately addressed. These initiatives must be developed with input from various stakeholders.

Practical Implications. The research results would inform the curriculum, incorporating skill development processes tailored to various scenarios. These findings would aid business organisations in crafting skill development programs that address identified skill gaps. Challenges in skill development would be taken into account during course development, and relevant teaching–learning materials would be created. Key stakeholders, such as accrediting organisations, employers, and students, should exert more influence on academic institutions to prioritise societal demands for economic development.

Originality/Value. The uniqueness and significance of this chapter lie in its concise summary of the strategies to tackle the hurdles in skill development.

The study aims to investigate the relationship between competition and efficiency. Using bank-level data for Indian banks, relationship between competition and efficiency is examined by applying the Granger causality test for the period 1996 to 2011.

Lerner Index is a measure of market power and is applied for estimation of competition. Data envelopment analysis technique is applied for measuring efficiency in the Indian banking system along with the Granger causality test to look at the relationship between competition and efficiency.

Results show an increasing trend for competition for the period 1996 to 2004, and after that there is fall in competitive levels. Granger causality tests show that competition positively effects efficiency and vice-versa.

This study gives an insight into the relationship between competition and efficiency, thus providing an alternative view to the structure–conduct–performance paradigm. An efficient banking system can positively impact the growth of an economy and, hence, competition and efficiency are important decision parameters for regulators and could help them in decision-making and policy formulation.

This study has covered more than 90 per cent of the banking assets for looking at competition and efficiency in the banking sector. Policymakers can try to improve competitive levels in banking so as to improve efficiency in the banking sector which can further help in developing the investment-savings cycle.