The Impact of Portfolio Risk on Performance of Scheduled Commercial Banks in India

Manmeet Singh and R K Vyas

The IUP Journal of Bank Management, 2011, vol. X, issue 3, 34-48

Abstract: Banks in their role as financial intermediaries take considerable financial risks. But the global financial meltdown has changed the banking scenario. Banks are taking utmost care in lending and investment in securities to maintain liquidity and manage the risk in assets portfolio. This paper investigates the impact of portfolio risk and other bank-level factors on the performance of scheduled commercial banks in India through a panel data study during the period 1997-2009. The results suggest that there is a significant impact of portfolio risk on the performance of banks. It means banks which are having more risk in their assets portfolio are enjoying high Return on Assets (ROA). Similarly, Capital to Risk-Weighted Assets Ratio (CRAR), Non-Interest Income (NII), and Net Interest Margin (NIM) make a significant contribution in improving the profitability of banks.

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjbm:v:10:y:2011:i:3:p:34-48

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