FII share and bank performance: an empirical analysis of Indian banks

Umakrishnan Kollamparambil and Indrani Banerjee

Afro-Asian Journal of Finance and Accounting, 2008, vol. 1, issue 1, pages 26-39

Abstract: This paper investigates the relationship between the Foreign Institutional Investment presence and firm performance of 25 listed banks of the Indian banking industry. The results indicate that the FII share plays a significant and positive role in determining the performance of public sector but not necessarily private sector banks. This is explained by the critical role that FII plays in public sector banks in improving managerial efficiency by avoiding issues relating to moral hazard. Private banks suffer less from problems of moral hazard, and therefore, the role of FII in such banks is not as critical as in the case of public sector banks.

Keywords: banking; foreign institutional investment; FII; bank performance; Indian banks; India; public sector banks; private sector banks (search for similar items in EconPapers)
Date: 2008

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Persistent link: http://EconPapers.repec.org/RePEc:mes:afasfa:v:1:y:2008:i:1:p:26-39

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