DOI: 10.5176/2251-1997_AF18.197
Authors: Dr. Prakash Singh
Abstract:
The global financial meltdown caused by the subprime mortgage crisis of United States of America in 2007-2008 and its negative effects on the structure of the financial markets all over the world have resulted in a crisis related to the management of capital. The study focuses on Indian banking sector by concentrating on the factors affecting the efficiency of risk management practices in Indian banks in light of the BASEL III provisions. The main objective of the study is to analyze the main components and quality of bank assets in India and subsequently identify the effect of risk taking on banks, economic cycle fluctuations and risk management. The empirical analysis has been done using panel regression techniques by taking a combination of time series and cross sectional data of various bank specific and macroeconomic factors. Capital adequacy is used as a proxy to measure the solvency level of the banks forced by capital depletion as the dependent variable and it will be measured by dividing regulatory capital with total risk weighted asset. Macroeconomic indicator economic growth and inflation came out to be significant while the capital adequacy of Indian banks was found to be positively associated with credit risk.
Keywords: asset base, bank, Basel III, risk.
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