Title: Do banks' investment in capital market impact on performance? Evidence from Indian banks

Authors: Brajaballav Pal; Saswata Choudhury

Addresses: Department of Commerce, Vidyasagar University, VU Post Office, Paschim Medinipur, West Bengal-721102, India ' Department of Commerce, Adamas University, Barasat Post Office, West Bengal-700126, India

Abstract: Indian banks invest a large volume of their funds under different components of the capital market. Investment in such components gives birth to different kinds of risks in the investment portfolios. Such risks in most cases may cause the assets loss of the banks and in some cases lead to closure of the banks. The present paper attempts to identify the different classes of risks attached with the components as well as finding the linkage between different classes of risks and banks' performance by taking the top ten banks operating in India; five banks from both public and private sector for period 2017 to 2021. Using robust panel data regression, the results revealed that both market risk (MR) and credit risk (CR) have significant impact on the performance of the banks while the MR has a significant influencing role to downgrade the banks' performance.

Keywords: bank; component; credit risk; CR; market risk; MR; performance; investment.

DOI: 10.1504/IJBFMI.2023.134475

International Journal of Business Forecasting and Marketing Intelligence, 2023 Vol.8 No.4, pp.347 - 357

Received: 14 Sep 2022
Accepted: 29 Oct 2022
Published online: 24 Oct 2023 *

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