Comparative study of risks in Indian banks: an empirical analysis using bank-dependent factors and economic indicators

Prakash Singh

International Journal of Indian Culture and Business Management, 2021, vol. 22, issue 2, 213-232

Abstract: The global financial meltdown caused by the sub-prime mortgage crisis of the USA in 2007-2008 and its consequent negative effects on the structure of the financial markets all over the world resulted in a crisis related to the management of capital. The study focuses on the Indian banking sector, and more specifically, on the factors affecting the efficiency of risk management practices in the Indian banks in light of the Basel III provisions. The objective of the study is to analyse the main components and quality of bank assets in India and subsequently identify the effect of risk-taking on banks, economic cycle fluctuations and risk management. Empirical analysis is conducted using panel regression techniques by taking a combination of time series and cross-sectional data of various bank-specific and macroeconomic factors. Capital adequacy is used as a proxy to measure the solvency level of the banks forced by capital depletion as the dependent variable and is measured by dividing regulatory capital with total risk-weighted asset. Macroeconomic indicator economic growth and inflation are found to be significant while capital adequacy of Indian banks is found to be positively associated with credit risk.

Keywords: asset base; bank; Basel III; risk. (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijicbm:v:22:y:2021:i:2:p:213-232

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