An Empirical Study of Asset Liability Management Approach by the Indian Banks

Chakraborty, Suman; Mohapatra, Subhalaxmi

An Empirical Study of Asset Liability Management Approach by the Indian Banks

Suman Chakraborty and Subhalaxmi Mohapatra

The IUP Journal of Bank Management, 2009, vol. VIII, issue 3 & 4, 7-13

Abstract: The banking scenario in India in the 1980s and now, presents a perfect study of contrast. Due to several reforms, banks are now moving away from the traditional lines of service and in the process, are exposed to more risks. One of the ways for managing the risks is Asset Liability Management (ALM). ALM is an attempt to match the assets and liabilities in terms of their maturities and interest rate sensitivities so that the risk arising from such mismatches mainly—interest rate risk and liquidity risk—can be contained within the desired limit. As far as ALM in Indian banking system is concerned, it is still in a nascent stage. Against this backdrop, the objective of the paper is to study and analyze the status of ALM approach in the Indian banking system. For this purpose, a sample consisting of nationalized, private, and foreign banks operating in the Indian environment was taken and the multivariate statistical technique, canonical correlation has been done to capture the nature and strength of relationship between the assets and liabilities in these banks. From the analysis, it is derived that a majority of banks have a good ALM framework in place. The study also indicates a strong relationship between fixed assets and net worth for all groups of banks.

Date: 2009
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjbm:v:8:y:2009:i:3&4:p:7-13

Access Statistics for this article

More articles in The IUP Journal of Bank Management from IUP Publications
Bibliographic data for series maintained by G R K Murty ().