Income Diversification, Funding Strategies: Impact on Risk and Return Evidence From Indian Banks
12 Pages Posted: 13 May 2019
Date Written: February 24, 2019
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: Suggested Citation