Determinants of the exit decision of foreign banks in India

Onkar Shivraj Swami, N. Arun Vishnu Kumar and Palash Baruah

MPRA Paper from University Library of Munich, Germany

Abstract: There is hardly any study in the existing literature regarding the foreign banks’ exit decision in India. This study tries to identify the CAMEL (i.e., C=Capital adequacy, A=Asset quality, M=Management decision, E=Earning ability and L=liquidity) variables that could qualify as the determinant of foreign banks closing their business operations in India which entered after the financial sector reforms. Logistic Regression Model was used to identify the risk factors associated with the closure of business-operation of foreign banks in India. It seems that foreign banks with higher non-performing assets (NPAs), lower return on equity and lesser profit per employee were more likely to close their business in India than otherwise.

Keywords: CAMEL; Logistic Regression Model; Foreign Banks; India (search for similar items in EconPapers)
JEL-codes: C12 C13 G21 (search for similar items in EconPapers)
Date: 2012-05-10
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Published in Ushus Journal of Business Management 1.10(2011): pp. 1-16

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