Changing Income Structure, Ownership and Performance: An Empirical Analysis of Indian Banking Sector

K U Umakrishnan and Arindam Bandyopadhyay (arindam@nibmindia.org)

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the relationship between the changing patterns of bank’s source of income and risk adjusted performance. A database of 77 banks over the period of 1999 to 2004 is constructed for the 27 public sector banks, 22 private banks, 25 foreign banks and 3 cooperative banks to compare their change in income composition. Bank’s performance is measured by risk adjusted return on BIS risk allocated capital (RARORAC). To examine the relationship between ownership pattern and performance, we compare the difference between new generation private sector banks and foreign banks with their public sector and cooperative banks counterparts. We argue that in a competitive financial market in order to change the profitability drivers in banking, Indian banks need to improve their non-interest income and also augment risk adjusted interest income through better risk based pricing.

Keywords: Banking; Value creation and performance (search for similar items in EconPapers)
JEL-codes: D60 G21 G32 L11 (search for similar items in EconPapers)
Date: 2005-12-31
New Economics Papers: this item is included in nep-ban, nep-cwa and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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