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Article
Publication date: 6 February 2017

Jacqueline Birt, Mahesh Joshi and Michael Kend

The purpose of this paper is to investigate the value relevance of segment information for both public and private sector banks in India. In doing so, this paper examines…

Abstract

Purpose

The purpose of this paper is to investigate the value relevance of segment information for both public and private sector banks in India. In doing so, this paper examines a rapidly developing economy and perhaps its most critical sector during this period of strong economic growth.

Design/methodology/approach

In this study uses the simplified Ohlson model, for a sample of 136 private sector and public sector banks for the period 2007-2010 in India.

Findings

The paper finds that public sector banks have higher share prices, higher earnings and more equity compared with private sector banks. Segment earnings data is highly value relevant for both sectors; however, segment equity data is only marginally value relevant for Indian banks. The number of segments is also value relevant and associated with higher share prices.

Originality/value

The results of this study contribute additional evidence to the literature on segment reporting by studying the effect of adoption of segment reporting in an emerging market. Findings from the paper are particularly relevant as India is currently in the process of changing its segment reporting requirements and moving to an IFRS-based segment standard.

Details

Asian Review of Accounting, vol. 25 no. 1
Type: Research Article
ISSN: 1321-7348

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Article
Publication date: 5 May 2015

Santi Gopal Maji and Utpal Kumar De

– This paper aims to examine the association between regulatory capital and risk of Indian commercial banks and the impacts of other relevant variables on them.

Abstract

Purpose

This paper aims to examine the association between regulatory capital and risk of Indian commercial banks and the impacts of other relevant variables on them.

Design/methodology/approach

The study is based on a secondary data set on Indian commercial banks collected from “Capitaline Plus” corporate database and annual reports of the respective banks. Total 41 major Indian banks (21 public and 20 private sector banks) are considered in this study. Here absolute values of capital and risk are used as dependent variables along with some relevant bank specific explanatory variables in a system of a two-equation model. Based on the nature of interrelationship and identifiability of the equations, three-stage least squares (3SLS) technique is used to estimate the relationship.

Findings

Risk and capital of Indian commercial banks are inversely associated. The influence of profitability on both capital and risk is significantly positive. Moreover, human capital efficiency is negatively associated with the undertaking of risk by the banks. In this respect, Indian private sector banks are found to be more efficient in utilizing human capital for reducing credit risk.

Originality/value

It is the first comparative study in India examining the relationship between capital and risk of Indian public and private sector commercial banks covering both Basel I and II periods. Further, the role of human resource in managing risk is considered as a relevant variable in this study.

Details

Journal of Financial Economic Policy, vol. 7 no. 2
Type: Research Article
ISSN: 1757-6385

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Article
Publication date: 28 November 2018

Kishore Kumar and Ajai Prakash

Sustainable development has now been recognised as the pivot around which development activities should revolve. Banking is an important component in the same and adoption…

Abstract

Purpose

Sustainable development has now been recognised as the pivot around which development activities should revolve. Banking is an important component in the same and adoption of sustainable banking practices by various banking institutions is a strong driver to achieve sustainable development. The purpose of this paper is to study the level of adoption of sustainable banking tools and the extent to which banking institutions practice the same in India. In addition, the banking institutions have been ranked and categorised on basis of their sustainable banking performance.

Design/methodology/approach

The proposed framework focuses on the environmental and social conduct of the banks, who address the issues of sustainability in Indian banking sector. As there is a difference in the economic standards of developed and developing countries, the review of literature helps to figure out the gap in specific frameworks for assessing sustainable banking practices in developing countries. Previous researchers have made an attempt to develop a general framework for assessing the sustainable banking efforts of the banking sector. These studies fall short of indicators on the social dimension of sustainability specifically in the context of less developed countries like India, the social dimensions are is equally a major thrust area along with environmental indicators. Content analysis technique has been used to evaluate sustainable banking performance of the banks and Mann–Whitney U test used to determine the differences in sustainable banking performance of the banks in India.

Findings

In Indian banking sector, the adoption of the international sustainability code of conduct is still in its nascent stage. The research indicates that sustainability issues which are of the highest priority for the banks are directly related to their business operations such as financial inclusion, financial literacy and energy efficiency, and banks are more focussed on addressing social dimension of sustainability in banking rather than important dimensions of sustainable banking, namely, environmental management, development of green products and services and sustainability reporting.

Practical implications

The application of the proposed framework reflects the status quo of sustainable banking in India. This study is useful for the banks and all the stakeholders in understanding more about the shortcomings in integrating sustainability issues in banking. Further, the present study also redresses the extant research dearth in the field of sustainable banking in the Indian context.

Originality/value

This is one of the first studies evaluating the sustainable banking performance of the Indian banking sector.

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Article
Publication date: 8 November 2018

Rohit Bansal, Arun Singh, Sushil Kumar and Rajni Gupta

The purpose of this paper is to quantify several measures to examine the determinants of profitability for the listed Indian banks. The authors include both public sector

Abstract

Purpose

The purpose of this paper is to quantify several measures to examine the determinants of profitability for the listed Indian banks. The authors include both public sector (PSUs) and private sector’s banks in the study. The authors have taken all the banks that are registered on the Bombay stock exchange (BSE) in the sample. This paper also intends to identify the association between the net profit margin (PM) and return on assets (ROA) with the several other independent variables of the Indian banking sector including private banks and public banks over the past six years starting from April 1, 2012 to March 31, 2017. Therefore, a sample of 39 listed banking companies and total 195 balanced observations are selected for the analysis purpose.

Design/methodology/approach

The authors have used profitability as a dependent variable represented by net PM, ROA and several financial ratios as independent variables. Financial statement and income statement of all listed banks were obtained from BSE and particular company’s website. Panel data regression has been analyzed with both the descriptive research techniques, i.e., fixed effects and random effects. The authors also verified both panel techniques with Hausman’s specification test, which is a widely used procedure for selecting a panel effect. The authors applied PP – Fisher χ2, PP – Choi Z-statistics and Hadri to testing whether the data set is free from unit root problem and data set is a stationary series.

Findings

Results imply that interest expended interest earned (IEIE) and credit deposit ratio (CRDR) reduced the profitability of private banks in India. IEIE, CRDR and quick ratio (QR) reduced the profitability of public banks in India, while cash deposit ratio (CDR) and Advances to Loan Funds (ALF) increased the effectiveness of public banks. Under the total banks IEIE, CRDR reduced the profitability, on the other side, CDR, ALF and Total Debt to Owners Fund (TDOF) increased the profitability of total banks in India. Under the dependency of ROA, CRDR and TDOF reduced the return of private banks in India, while CDR, ALF and QR enhanced the profitability of private banks.

Originality/value

No variables found significant under public banks while taking ROA as a dependent variable. Under the overall banking data, CRDR reduced the profitability. On the other side, capital adequacy ratio and ALF increased the profitability of total banks in India. The findings of this study will support policy creators, financial executives and investors in constructing investment decisions.

Details

Asian Journal of Accounting Research, vol. 3 no. 2
Type: Research Article
ISSN: 2443-4175

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Article
Publication date: 19 September 2008

Sunil Kumar and Rachita Gulati

The purpose of this paper is to evaluate the extent of technical efficiency in 27 public sector banks operating in India and to provide strict ranking to these banks.

Abstract

Purpose

The purpose of this paper is to evaluate the extent of technical efficiency in 27 public sector banks operating in India and to provide strict ranking to these banks.

Design/methodology/approach

Two popular data envelopment analysis (DEA) models, namely, CCR model and Andersen and Petersen's super‐efficiency model, were utilized. The cross‐section data for the financial year 2004/2005 were used for obtaining technical efficiency scores.

Findings

The results show that only seven of the 27 banks are found to be efficient and thus, defined the efficient frontier; and technical efficiency scores range from 0.632 to 1, with an average of 0.885. Thus, Indian public sector banks, on an average, waste the inputs to the tune of 11.5 percent. Andhra Bank has been observed to be the most efficient bank followed closely by Corporation Bank. Further, the banks affiliated with SBI group turned out to be more efficient than the nationalized banks. The regression results incisively indicate that the exposure to off‐balance sheet activities, staff productivity, market share and size are the major determinants of the technical efficiency.

Practical implications

The practical implication of the research findings is that apart from the proportional reduction of all inputs equivalent to the amount of technical inefficiency, most of the inefficient public sector banks need to reduce the use of the physical capital and augment non‐interest income to project themselves on the efficient frontier.

Originality/value

This paper is the first to provide a strict ranking of Indian public sector banks on the basis of super‐efficiency scores.

Details

International Journal of Productivity and Performance Management, vol. 57 no. 7
Type: Research Article
ISSN: 1741-0401

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Article
Publication date: 6 February 2017

Y.L.R. Moorthi and Bijuna C. Mohan

The purpose of this paper is to relate the customer value proposition offered by a bank with its structure of ownership.

Abstract

Purpose

The purpose of this paper is to relate the customer value proposition offered by a bank with its structure of ownership.

Design/methodology/approach

The study adopted a combination of exploratory and descriptive approaches. The attitudes and opinions of bank customers were gauged through a survey. Based on literature, a pool of items was identified to measure the construct of value proposition. It was hypothesized that different types of banks in India are chosen for different benefits offered by them. The relationship between value proposition and its constituent variables functional, emotional and self-expressive benefits was analyzed using multiple regression.

Findings

Results prove that while self-expressive benefits drive the choice of foreign banks (FBs), functional benefits are important for all types of banks.

Research limitations/implications

The research intends to study only the perceptions of customers having an account in Indian public sector banks, private sector banks or FBs.

Practical implications

The study helps to relate the type of bank (public, private or foreign) a customer chooses, with the value proposition it offers. Using this study, banks can configure the value proposition that is appropriate for their target segment.

Originality/value

The paper examines the value proposition offered by the three different types of banks (public, private and foreign) empirically. It links bank choice of the customer to the benefit assortment offered by different types of banks.

Details

International Journal of Bank Marketing, vol. 35 no. 1
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 28 January 2019

Pavitra Dhamija, Shivam Gupta and Surajit Bag

Banking industry forms a part of financial services that has emerged itself as the most important source for India’s economic growth. Job satisfaction of employees is one…

Abstract

Purpose

Banking industry forms a part of financial services that has emerged itself as the most important source for India’s economic growth. Job satisfaction of employees is one of the important pre-requisites to ensure smooth functioning of banks. The purpose of this paper is to explore the association of job satisfaction with the quality of work life factors of bank employees (n=300), followed by the essential influential relationship of these concepts with socio-demographic characteristics, thereby, proving its own distinct contribution to the subsist body of literature.

Design/methodology/approach

This study has considered five private sector banks in India and has used the technique of multi-stage sampling to collect primary data. The respondents from different cadres, namely, executive, associate and manager involved in customer-oriented interactions participated in this survey. The analysis has been conducted by applying descriptive statistics, regression analysis (impact of the quality of work life factors on job satisfaction) and χ2 statistics (association of the quality of work life and job satisfaction with socio-demographic variables). The results have been compared with the Herzberg Theory of Job Satisfaction.

Findings

The results of the study show the presence of variance (R2 61.40 percent) in job satisfaction as explained by the quality of work life constructs. The unconducive work environment has confirmed negative association with job satisfaction. The study foresees to contribute useful information to the top management level in the organizations to enhance employees’ overall job satisfaction.

Research limitations/implications

The opaqueness with which the Indian banking industry has its roots and existence in India, the present study clearly has limits: the small size of the sample and the study considered only private sector banks.

Practical implications

A planned approach at organizational and individual level is highly recommended. The bank management must realize the importance of their devoted staff by giving them quality work environment. The initiatives like regular exercise routines can be adopted to reduce stress. Some respondents expressed the need for intercity branch associations, which can help them to solve common problems, better learning opportunities with an informal atmosphere along with other training sessions organized formally.

Originality/value

The paper gives a theoretical explanation of the quality of work life and job satisfaction factors in the Indian private banks falling under the umbrella of Indian banking industry with respect to the employees of private sector banks.

Details

Benchmarking: An International Journal, vol. 26 no. 3
Type: Research Article
ISSN: 1463-5771

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Article
Publication date: 9 April 2018

Santi Gopal Maji and Preeti Hazarika

The purpose of this paper is to investigate the association between capital regulation and risk-taking behavior of Indian banks after incorporating the influence of…

Abstract

Purpose

The purpose of this paper is to investigate the association between capital regulation and risk-taking behavior of Indian banks after incorporating the influence of competition. Further, the study intends to enrich the existing literature by providing empirical evidence on the role of human resources in managing risk along with the influence of other bank specific and macroeconomic variables.

Design/methodology/approach

Secondary data on 39 listed Indian commercial banks are collected from “Capitaline Plus” corporate data database for a period of 15 years. Capital is measured by capital adequacy ratio as defined by the regulators, and two definitions of risk – credit risk and insolvency risk – are employed. Competition is measured by Herfindahl-Hirschman deposits index, concentration ratio and H-statistic. The value-added intellectual coefficient model is employed to compute human capital efficiency (HCE). Three-stage least squares technique in a simultaneous equation framework is used to estimate the coefficients.

Findings

The study finds that absolute level of regulatory capital and bank risk are positively associated, although the influence of capital on risk is not statistically significant. The influence of competition on risk is negative for all the models, which supports the “competition stability” view. The impact of human capital on bank risk is also negative for all cases.

Practical implications

The findings of the study are useful for the decision makers in several ways based on the inverse influence of competition and HCE on bank risk. Further, the observed positive association between capital and risk indicates that the capital regulation is not sufficient to enhance the stability in the banking sector.

Originality/value

This is the first study in the Indian context that incorporates the competition in the banking industry as an explanatory variable in the extant bank capital and risk relationship.

Details

Managerial Finance, vol. 44 no. 4
Type: Research Article
ISSN: 0307-4358

Keywords

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Article
Publication date: 19 September 2016

Saibal Ghosh

The relation between size and growth in banking firms in emerging economies has not been adequately addressed in the literature. By employing data for 1992-2014, the…

Abstract

Purpose

The relation between size and growth in banking firms in emerging economies has not been adequately addressed in the literature. By employing data for 1992-2014, the purpose of this paper is to examine the relationship between growth and productivity and how it interacts with ownership.

Design/methodology/approach

The longitudinal nature of the data suggests that the appropriate technique for the analysis is panel data econometrics. Accordingly, consistent with prior research, the author employs a fixed effects model. Besides accounting for firm-level observables, the author controls the economic environment and bank ownership by employing real GDP growth and ownership dummies.

Findings

The evidence appears to suggest that growth improves through both active and passive learning, the magnitude of the former far outweighing that of the latter. These results are remarkably robust: both baseline regressions and sensitivity tests point to similar conclusions.

Originality/value

To the best of the author’s knowledge, the paper makes two original contributions. First and more broadly, it tests the relationship between growth and productivity for banks in a leading emerging economy. Second, it distinguishes between two kinds of learning – active and passive – and explores which of them are more relevant for growth.

Details

International Journal of Emerging Markets, vol. 11 no. 4
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 11 March 2014

Krishna Murari and Bindiya Tater

The main aim of carrying out this study was to measure the attitude of employees towards the adoption of information technology (IT)-based banking services among private

Abstract

Purpose

The main aim of carrying out this study was to measure the attitude of employees towards the adoption of information technology (IT)-based banking services among private sector banks of India.

Design/methodology/approach

Descriptive research methodology is used to accomplish the study using convenience sampling technique. The study is conducted in four private sector banks of India from Bikaner and Jaipur regions of Rajasthan. A questionnaire was developed based on five parameters, i.e. relative advantage, complexity, potential risk, strategic advantage in decision-making process and innovation and development to ascertain the attitude of the employees. The data are collected from 180 bank employees (executive, manager, officer) through structured questionnaire method out of which 129 employees replied to the questionnaire. Frequency percentage and ANOVA test is adopted as the statistical measure.

Findings

The study revealed that IT has led to increased customer satisfaction, improved operational efficiency, reduced transaction time, and gives the bank a competitive edge in reducing the running cost by quick responses in delivery of services.

Research limitations/implications

A sample of only four private sector banks is taken into consideration.

Practical implications

The study is useful for the banking policy makers in terms of application of IT for spreading the reach of banking services to the mass.

Originality/value

This paper explores the use of IT-based banking services for research purposes on private banking. It will be of great value for researchers and professionals involved in IT-based banking services.

Details

Competitiveness Review, vol. 24 no. 2
Type: Research Article
ISSN: 1059-5422

Keywords

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