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A Simple Index of Banking Fragility: Application to Indian Data

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  • Saibal, Ghosh

Abstract

Using data on Indian banks for 1997-2007, the paper develops an index of banking fragility and subsequently examines the factors affecting the index. Based on the statistical properties of the index, we classify banks as exhibiting high, moderate and low stability. The multivariate regressions indicate an important role for banking industry variables in influencing the index.

Suggested Citation

  • Saibal, Ghosh, 2010. "A Simple Index of Banking Fragility: Application to Indian Data," MPRA Paper 30321, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:30321
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    References listed on IDEAS

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    1. Eichengreen, Barry & Arteta, Carlos, 2000. "Banking Crises in Emerging Markets: Presumptions and Evidence," Center for International and Development Economics Research, Working Paper Series qt3pk9t1h2, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
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    7. S. Narayan, 2009. "India," Chapters, in: Peter Draper & Philip Alves & Razeen Sally (ed.), The Political Economy of Trade Reform in Emerging Markets, chapter 7, Edward Elgar Publishing.
    8. International Monetary Fund, 1998. "Leading Indicators of Banking Crises: Was Asia Different?," IMF Working Papers 1998/091, International Monetary Fund.
    9. Asli Demirgüç-Kunt & Enrica Detragiache, 1998. "The Determinants of Banking Crises in Developing and Developed Countries," IMF Staff Papers, Palgrave Macmillan, vol. 45(1), pages 81-109, March.
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    2. 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.
    3. 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).
    4. 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.
    5. Shiwangi Sethi & Mohinder Singh & Amit Kumar Basantaray, 2025. "A macro–micro framework for predicting bank distress: empirical insights," Indian Economic Review, Springer, vol. 60(1), pages 163-183, June.
    6. Swain, Pankaj & Poddar, Abhishek & Misra, Arun Kumar, 2025. "How stressed are the banks? An inter-temporal network analysis," Emerging Markets Review, Elsevier, vol. 69(C).

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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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