Over the last decade, the role of credit risk management practices in the overall risk management in the commercial banks was well accepted and banks have established a set of these practices, collectively known as Credit Risk Management (CRM) framework. The present paper evaluates the strength of CRM framework in the Indian banking industry, and makes a quantitative assessment of the overall CRM framework and each of its three major elements, namely, CRM organization, CRM policy and strategy, and CRM operations and systems. The CRM operations and systems are closely studied at transaction and portfolio levels. The paper statistically arrives at two potential areas of improvement that bank management should focus on in the near future, namely, credit risk monitoring at transaction level and credit portfolio risk analysis. The study provides new insights into CRM process and CRM framework in commercial banks.
The decision regarding the funding structure of Microfinance Institutions (MFIs) is crucial. Considering the poor financial background of MFIs’ borrowers and the small loan size provided to them, the cost of capital to the lenders matters most. Keeping in view the recent structural and ownership changes of the Indian MFIs, an attempt has been made in this paper to understand the funding status and to find the important influential variables of the capital structure of MFIs. Though across the world the maturity profile, i.e., age, is found to be the important variable, which is explained through the life cycle theory, in a few other cases, the regulatory status of MFIs is also identified. The analysis of Indian MFIs reveals that neither regulatory status nor their maturity influences the capital structure; rather profitability has emerged as the significant variable. Considering this relationship and the importance of debt finance in the capital structure, it is suggested that rather than depending on institutional borrowings, the Indian MFIs need to scout for alternative, market-related, cheap debt sources.
This paper studies the comparative performance of selected banks in India from 2008 to 2012, on the basis of certain criteria. Nowadays banks are performing a number of functions in addition to their two main functions, i.e., lending and accepting deposits. Public and private sector banks are competing with each other in bringing out new products and services. This paper analyzes the growth, performance and services provided by both public and private sector banks in terms of loans, cash credits, advances outside India, NPAs, net profits, etc.
This paper investigates the effects of bank liquidity needs on the monetary authority’s reaction. Over the period stretching between January 1990 and December 2010, we find that the liquidity resources are unsteady and insufficient, whereas liabilities are higher and unsteady. Based on ordinary least square regression and lagged operator technique, we study the efficiencies of the Tunisian central bank interventions. It is found that in Tunisia, the bank liquidity need is in some way neglected by monetary authorities, although it has a short-term and steady effect on the central bank reaction. It is recommended that the central bank distinguish between banks’ bailout strategy and monetary policy so that the banks focus on liquidity gap resources.
This paper addresses the factors that affect the user acceptance of cyber banking information systems in India. The paper also presents a cross-sectional analysis of cyber banking usage among the Indian public and private sector banks. The data was collected through a structured questionnaire administered on the cyber banking users of both public and private sector banks of India. The data was first analyzed with principal component analysis through which a Structural Equation Model was developed. Using principal component analysis, five factors—Effectiveness and Trustworthy (EFF&TW), Intend to Use (ITU), Usage Constraints (USC), Easy to Use (ETU) and Accessibility (ACC)—were extracted. The extracted factors were further regressed using OLS regression. The results reveal that out of five factors, the first three factors, i.e., EFF&TW, ITU, USC, consisting of 17 variables, were highly significant at 99% level, which contribute maximum to the overall satisfaction of the customers. The results also reveal that the difference between the overall satisfaction level of the customers of private and public sector banks is less significant as per the regression value.
The study critically examines the impact of capitalization on bank liquidity creation in selected banks of Nigeria using the annual data of 10 banks for the period 2006 to 2010. The results of Levin, Lin and Chu unit root test show that all the variables are nonstationary at level. The results of Panel Least Square (PLS) regression reveal that bank size and capital asset ratio are positively related to bank capital but only bank size is significantly related to bank capital. In addition, the results show that bank liquidity and non-performing/assets ratio have a non-significant negative effect on bank capital. The implication is that better capitalized banks tend to create less liquidity, which supports the ‘financial fragility crowding out’ hypothesis. This finding has important policy implications for emerging countries like Nigeria as it suggests that bank capital requirements, that is, recapitalization policy, implemented to support financial stability, may harm liquidity creation. The financial regulatory body needs to provide appropriate effective measures to adequately enhance transparent accountability. Measures such as relaxation or elimination of restrictions on profits and capital remittances, opening of formerly ‘priority’ sectors to investors, and provision of adequate security, among others, should be put in place.
