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- Title
Risk Analysis of Scheduled Commercial Banks of India.
- Authors
Bandopadhyay, Kalpataru; Bandyopadhyay, Souvik Kumar
- Abstract
Overall risk of a bank depends on many factors. In this paper, we investigate how group characteristics and bank-wise individual factors (credit policy, extent of hedging) influence the risk of a bank and how they vary with time. Initially we used coefficient of variation and K-means cluster analysis to explore the nature of the data. Further, we attempted a mixed modeling strategy to model the net interest margin values, treated as a surrogate of the exposed risk of a bank. The estimates of mixed model suggested that although there was an observed group-wise disparity in the level of risk, risk is more sensitive towards the individual characteristics of the bank. It was also observed in the study that the temporal effect on group-wise characteristics and individual bank characteristics is minimal in determining their influence on the exposed risk of a bank. The study indirectly demonstrates why Indian banks are almost unperturbed even in the backdrop of collapse of big banks in US and Europe.
- Subjects
INDIA; BANKING industry; RISK assessment; MULTIVARIATE analysis; FINANCIAL risk management
- Publication
Decision (0304-0941), 2010, Vol 37, Issue 3, p48
- ISSN
0304-0941
- Publication type
Article