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A simple index of banking fragility: application to Indian data

Author

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  • Saibal Ghosh

Abstract

Purpose - Using data on Indian banks for 1997‐2007, the purpose of this paper is to develop an index of banking fragility and subsequently examine the factors affecting the index. Design/methodology/approach - The author employs basic distributional assumptions to develop the index and subsequently, employs panel data techniques to examine the factors which affect the index. Findings - Based on the statistical properties of the index, banks are classified as exhibiting high, moderate, and low stability. The multivariate regressions indicate an important role for banking industry variables in influencing the index. Practical implications - The paper complements the strand of literature which has been focusing on developing indicators of banking stability and examining the factors affecting them. Originality/value - To the author's knowledge, this is perhaps the first study for an emerging economy and more certainly for India, to examine this issue.

Suggested Citation

  • Saibal Ghosh, 2011. "A simple index of banking fragility: application to Indian data," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 12(2), pages 112-120, March.
    • Handle: RePEc:eme:jrfpps:15265941111112839
    DOI: 10.1108/15265941111112839
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    Cited by:

    1. Rachita Gulati & M. Kabir Hassan & Vincent Charles, 2024. "Developing a New Multidimensional Index of Bank Stability and Its Usage in the Design of Optimal Policy Interventions," Computational Economics, Springer;Society for Computational Economics, vol. 63(4), pages 1281-1325, April.
    2. Gulati, Rachita & Singh, Nirmal & Kumar, Sunil & Duppati, Geeta, 2023. "Bank stability in the Indian subcontinent region: Evolution and determinants," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    3. Sreenivasulu Puli & Nagaraju Thota & A. C. V. Subrahmanyam, 2024. "Assessing Machine Learning Techniques for Predicting Banking Crises in India," JRFM, MDPI, vol. 17(4), pages 1-16, March.

    More about this item

    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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