Do Markets Know More?: India’s Banking Sector through the Lens of PBR
Pratap, B., Neogi, R. G., & Jose, J. (2021). Do Markets Know More? India’s Banking Sector through the Lens of PBR. Reserve Bank of India Bulletin, 75(2), pp. 85-92, Reserve Bank of India, Mumbai, India.
8 Pages Posted: 8 Jun 2021
Date Written: February 15, 2021
This article is an enquiry into the determinants of price-to-book ratio (PBR) of scheduled commercial banks (SCBs) in India. Our empirical analysis indicates that variations in PBR have linkages with financial and economic cycles. It also captures the ‘franchise value’ of banks and shares a close correlation with indicators relating to profitability and viability of banks. This article, therefore, suggests that PBR may be considered as an alternative measure of bank value.
Keywords: Price-to-book ratio, Banking sector, India, Market valuation, Panel data
JEL Classification: G21, G32, C23
Suggested Citation: Suggested Citation