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Changing Income Structure, Ownership and Performance: An Empirical Analysis of Indian Banking Sector


  • Umakrishnan, K U
  • Bandyopadhyay, Arindam


This paper investigates the relationship between the changing patterns of bank’s source of income and risk adjusted performance. A database of 77 banks over the period of 1999 to 2004 is constructed for the 27 public sector banks, 22 private banks, 25 foreign banks and 3 cooperative banks to compare their change in income composition. Bank’s performance is measured by risk adjusted return on BIS risk allocated capital (RARORAC). To examine the relationship between ownership pattern and performance, we compare the difference between new generation private sector banks and foreign banks with their public sector and cooperative banks counterparts. We argue that in a competitive financial market in order to change the profitability drivers in banking, Indian banks need to improve their non-interest income and also augment risk adjusted interest income through better risk based pricing.

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  • Umakrishnan, K U & Bandyopadhyay, Arindam, 2005. "Changing Income Structure, Ownership and Performance: An Empirical Analysis of Indian Banking Sector," MPRA Paper 5779, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:5779

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    References listed on IDEAS

    1. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
    2. Abhiman Das & Ashok Nag & Subhash Ray, 2004. "Liberalization, Ownership, and Efficiency in Indian Banking: A Nonparametric Approach," Working papers 2004-29, University of Connecticut, Department of Economics.
    3. Sarkar, Jayati & Sarkar, Subrata & Bhaumik, Sumon K., 1998. "Does Ownership Always Matter?--Evidence from the Indian Banking Industry," Journal of Comparative Economics, Elsevier, vol. 26(2), pages 262-281, June.
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    Cited by:

    1. Roy Trivedi, Smita, 2015. "Banking Innovations and New Income Streams: Impact on Banks’ Performance," MPRA Paper 63678, University Library of Munich, Germany.

    More about this item


    Banking; Value creation and performance;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D60 - Microeconomics - - Welfare Economics - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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