According to economic theory, there are at least three indicators of excess capacity in banking: (a) low loan-to-asset ratio, (b) low profitability and (c) high per unit operating expense. If excess capacity exists, it will be easiest to identify, through these indicators, at regional rural...

The determinants of credit risk of banks in emerging economies have received limited attention in the literature. Using advanced panel data techniques, the paper seeks to examine the factors affecting problem loans of Indian state-owned banks for the period 1994-2005, taking into account both...

The paper traces the determinants of depositor discipline in Indian banking. Using data for the period 1997:1 to 2002:4, the findings reveal that, while bank-specific factors are dominant in case of state-owned banks, systemic variables tend to overwhelm bank-specific factors in explaining...

Policy debate with regard to financial intermediaries has focused on whether, and to what extent, governments should impose capital adequacy requirements on banks, or alternately, whether market forces could also ensure the stability of banking systems. The paper contributes to this debate by...

While the relationship between portfolio risk and capital and its interrelationship with operating efficiency has been extensively studied, little work has been forthcoming on the interrelationships among credit risk, capital and productivity change. The paper makes an attempt to examine the...

The paper examines the interaction between risk, capital and operating efficiency in a simultaneous equation setting. Using data on Indian state-owned banks for 1993-2000, the analysis finds these variables to be intertwined, with each reinforcing the other, although the results differ across...

Employing data on Indian banks for 1992-2012, the article examines the impact of macroprudential measures on bank performance. First, it finds that state-owned banks tend to have lower profitability and soundness than their private counterparts. Next, it tests whether such differentials between...

The paper examines whether banks’ funding structure amplifies procyclicality. Using data for GCC banks for the period 1996-2009, the evidence suggests that banks with higher wholesale dependence cut back lending by a greater amount. In addition, the procyclicality of the financial system and...

Using data on Indian banks for 1996-2007, the article examines the impact of foreign banks on the domestic banking sector. The analysis suggests that foreign bank penetration improves profitability and asset quality, although it dampens spreads. The results are robust to alternate measures of...

The paper examines the association between corporate leverage and their investment in R&D. Towards this end, it develops certain testable propositions. These propositions are tested using a dataset of manufacturing firms in India covering the period 1995-2005. The estimates support the fact that...