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Canonical Correlation Analysis of Asset-Liability Management of Indian Banks

Author

Listed:
  • Mihir Dash

    (Alliance University, India)

  • Ravi Pathak

    (Standard Chartered Bank, India)

Abstract

Asset-liability management is the simultaneous planning of all asset and liability positions for a bank, considering the different bank management objectives and the legal, managerial and market constraints, for the purpose of enhancing the value of the bank, providing liquidity, and mitigating interest rate risk. The framework of asset-liability management broadly covers the areas of interest rate risk, liquidity risk, exchange risk and credit risk. The present study uses canonical correlation analysis to assess the nature of asset-liability management of different bank groups. The results of the study indicate that, among the three groups, private banks had the most dynamic asset-liability management, with a strategy of active liability management. Public and foreign banks seemed to concentrate on fixed assets in their asset-liability management strategies, without actively involving other asset classes, thus bringing the possibility of liquidity and interest rate sensitivity issues in their asset-liability management.

Suggested Citation

  • Mihir Dash & Ravi Pathak, 2016. "Canonical Correlation Analysis of Asset-Liability Management of Indian Banks," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(2), pages 75-81, May.
  • Handle: RePEc:ods:journl:v:5:y:2016:i:2:p:75-81
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    References listed on IDEAS

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    13. Narzia Florin, 2014. "Credit Appraisal Procedure of SME Loan: An Empirical Investigation on Selected Private Commercial Banks in Bangladesh," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 3(4), pages 193-200.
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    Citations

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    Cited by:

    1. Saroj Upadhyay & Sudeshna Gupta, 2016. "Taking a Relook into the Decision Making Process in Indian Banking Sector with Respect to Non-Performing Asset Management," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(3), pages 193-202, August.
    2. Ziyi Li & Xiaosong Zheng, 2017. "A Critical Study of Commercial Banks' Credit Risk Assessment and Management for SMEs: The Case of Agricultural Bank of China," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 6(2), pages 106-117, May.
    3. Umit Karagozlu, 2016. "Managing Risks in Commercial Banks," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 5(4), pages 250-263, November.

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