Income Diversification, Funding Strategies: Impact on Risk and Return Evidence From Indian Banks

12 Pages Posted: 13 May 2019

See all articles by Navneet Kaur

Navneet Kaur

Institute of Management Technology (IMT), Nagpur

Date Written: February 24, 2019

Abstract

This paper analyses the impact of bank’s income diversification and funding strategies on Bank’s Return on Asset and Z score (Proxy for Risk). Based on data from 2005- 2017 on Indian Public and Private sector banks. It has been found that even though the proportion of non-deposit funding is very less but still an important variable to study. It is found that Banks, who have higher proportion of non-deposit funding have higher Z score. For Public sector banks borrowings negatively impact the Return on Asset. Banks who diversify their income from non-interest income have higher non-deposit funding, return on Asset and Z score.

Keywords: Non-Deposit Funding, Income diversification, Bank ownership

JEL Classification: G20, G21, G28

Suggested Citation

Kaur, Navneet, Income Diversification, Funding Strategies: Impact on Risk and Return Evidence From Indian Banks (February 24, 2019). Available at SSRN: https://ssrn.com/abstract=3340811 or http://dx.doi.org/10.2139/ssrn.3340811

Navneet Kaur (Contact Author)

Institute of Management Technology (IMT), Nagpur ( email )

603 Khullar Apartments
Byramji Town
Nagpur, MA Maharashtra 440013
India

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