Portfolio risks and scale economies in banking: the Indian case
By: Das, Abhiman.
Material type:
ArticlePublisher: 1998Description: p.3-12.Subject(s): Banks - India | Banks
In:
International Journal of Development BankingSummary: This article examines the impact of portfolio risk, as measured by the asset quality, on bank costs and scale economy estimates in the context of Indian public sector banks by using a translog cost function approach. It is proved that banks with poor loan quality will have higher costs, but the direct impact of loan quality on bank costs appears to be small. Loan quality also affects significantly the translog cost function and scale economy estimates. Diseconomies of scale are likely to exist only for very large banks (deposit size > Rs.20000 crore) and this is more pronounced for banks which have high non-performing loan ratios. - Reproduced
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | Volume no: 16, Issue no: 2 | Available | AR41001 |
This article examines the impact of portfolio risk, as measured by the asset quality, on bank costs and scale economy estimates in the context of Indian public sector banks by using a translog cost function approach. It is proved that banks with poor loan quality will have higher costs, but the direct impact of loan quality on bank costs appears to be small. Loan quality also affects significantly the translog cost function and scale economy estimates. Diseconomies of scale are likely to exist only for very large banks (deposit size > Rs.20000 crore) and this is more pronounced for banks which have high non-performing loan ratios. - Reproduced
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