FUNDS MANAGEMENT IN THE CENTRAL COOPERATIVE BANKS OF PUNJAB— AN ANALYSIS OF FINANCIAL MARGIN

Fulbag Singh and Balwinder Singh

The IUP Journal of Bank Management, 2006, vol. V, issue 3, 74-80

Abstract: In a banking institution, the most important function is the management of the funds. The efficiency with which the funds are managed is reflected through the financial margin of the bank, which, in turn, is influenced by many factors. The ratio of own funds to working funds, the ratio of low cost deposits to total deposits, the ratio of overdues to total loans, the ratio of recovery to demand, the ratio of agriculture loan to total loan and the credit to deposit ratio are some of the factors which are identified for the present study. This paper attempts to estimate the impact of the identified variables on the financial margin of the Central Cooperative Banks in Punjab with the help of correlation and multiple stepwise regression approach. The ratio of own funds to working funds and the ratio of recovery to demand are observed to be having significant influence on financial margin, whereas the ratio of overdues to total loans is having a negative one. A high use of own funds and timely recovery of previous loans, as a source for funding further loans by the bank, help the financial margin in a positive way.

Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjbm:v:5:y:2006:i:3:p:74-80

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