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Determinants of the exit decision of foreign banks in India

Author

Listed:
  • Swami, Onkar Shivraj
  • Vishnu Kumar, N. Arun
  • Baruah, Palash

Abstract

There is hardly any study in the existing literature regarding the foreign banks’ exit decision in India. This study tries to identify the CAMEL (i.e., C=Capital adequacy, A=Asset quality, M=Management decision, E=Earning ability and L=liquidity) variables that could qualify as the determinant of foreign banks closing their business operations in India which entered after the financial sector reforms. Logistic Regression Model was used to identify the risk factors associated with the closure of business-operation of foreign banks in India. It seems that foreign banks with higher non-performing assets (NPAs), lower return on equity and lesser profit per employee were more likely to close their business in India than otherwise.

Suggested Citation

  • Swami, Onkar Shivraj & Vishnu Kumar, N. Arun & Baruah, Palash, 2012. "Determinants of the exit decision of foreign banks in India," MPRA Paper 38722, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:38722
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    File URL: https://mpra.ub.uni-muenchen.de/38722/1/MPRA_paper_38722.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    CAMEL; Logistic Regression Model; Foreign Banks; India;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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