COMPARATIVE ANALYSIS OF EMPLOYEES’ PERSPECTIVE ON ASSET-LIABILITY MANAGEMENT IN BANKS
Keywords:
Banking, Assets-Liabilities Management, Risk Management, Interest Rate risk, Liquidity Risk.
Abstract
Asset-Liability Management is critical for the successful working of banks. The Indian Financial system is very dynamic and growing rapidly. Banks focus on both the assets and liabilities due to liquidity risk, interest rate risk and foreign exchange risk. The implementation and understanding of ALM policies, and procedures will provide insight into the approach of banks towards ALM. A primary survey is conducted among employees of twelve public and twelve private banks to collect data related to employees' experience, understanding, and knowledge about the ALM. The questionnaire used in the study carries Yes/No type questions, multiple-choice questions, checklist questions, scaled questions. The data is analyzed using SPSS. The results suggest that public and private banks' employees have a similar understanding and knowledge of the ALM. Both types of banks follow identical practices and policies in the implementation of ALM with few deviations. The employees of the banks were hesitant to answer complex questions, and therefore questionnaire has to be kept generic and straightforward. This paper studies ALM in banks using primary data. All other studies have been conducted using secondary data or literature surveys. These studies did not feature the banks' approach in ALM policies, practices, and procedures.
JEL Classification Codes: E58, E43, G33, G32, D81.
References
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Adebisi, A. J., Alabi, A. W., & Fatimehin, K. (2020). Influence Of Risk Assets Impairment On Performance Of Nigerian Listed Deposit Money Banks. International Journal of Accounting & Finance Review, 5(3), 41–63.
Black, R., Brown, K., & Moloney, J. (2003). Asset and liability management : what does the future have in store ? Balance Sheet, 11(2), 32–38. https://doi.org/10.1108/09657960310480651
Chakraborty, S., & Mohapatra, S. (2009). An Empirical Study of Asset Liability Management Approach by the Indian Banks. The IUP Journal of Bank ManagementJournal of Bank Management, 8(3 & 4), 7–13.
Charumathi, B. (2008). Asset Liability Management in Indian Banking Industry - with special reference to Interest Rate Risk Management in ICICI Bank. Proceeding of the World Congress on Engineering, II(September).
Chatterjee, C., & Dutta, P. (2016). Exploring the Linkage between Profits and Asset–Liability Management: Evidence from Indian Commercial Banks. Paradigm, 20(2), 131–142. https://doi.org/10.1177/0971890716670707
Chattha, J. A., Alhabshi, S. M., & Meera, A. K. M. (2020). Risk management with a duration gap approach. Journal of Islamic Accounting and Business Research, 11(6), 1257–1300. https://doi.org/10.1108/JIABR-10-2017-0152
Chaturvedi, V. (2014). Asset Liability Management in Banks. International Journal of Engineering Technology, Management and Applied Sciences, 1(2), 2349–4476. Retrieved from http://www.ijetmas.com/admin/resources/project/paper/f201406281403951723.pdf
Das, A., & Ghosh, S. (2001). The Relationship Between Risk and Capital: Evidence from Indian Public Sector Banks. Reserve Bank of India Occasional Papers, 22(1, 2 and 3), 1–20. https://doi.org/10.1111/j.1813-6982.1961.tb02383.x
Dash, M., Venkatesh, K. A., & Bhargav, B. (2011). An Analysis of Asset-Liability Management in Indian Banks. SSRN Electronic Journal, 1–13. https://doi.org/10.2139/ssrn.1760786
Fabozzi, F. J., & Konishi, A. (1991). Asset/liability Management: Investment Strategies, Liquidity Requirements, and Risk Controls for Banks and Thrifts. Probus Publishing Company.
Fiedler, R., Brown, K., & Moloney, J. (2002). The dynamically projected balance sheet : implications for earnings , value and funds transfer pricing. Balance Sheet, 10(2), 17–21.
Goodman, L. S., & Langer, M. J. (1983). Accounting for Interest Rate Futures in Bank Asset-Liability Management. The Journal of Futures Markets, 3(4), 415–427. https://doi.org/10.1002/fut.3990030407
Haddad, A., Ammari, A. El, & Bouri, A. (2019). Impact of the Ownership Structure on the Financial Performance of Banks: Comparative Study between Conventional and Islamic Banks. International Journal of Accounting & Finance Review, 4(2), 50–63. https://doi.org/10.46281/ijafr.v4i2.442
Hair, J. F., Sarstedt, M., Hopkins, L., & Kuppelwieser, V. G. (2014). Partial least squares structural equation modeling (PLS-SEM): An emerging tool in business research. European Business Review, 26(2), 106–121. https://doi.org/10.1108/EBR-10-2013-0128
Hinton, P. R., Brownlow, C., McMurray, I., & Cozens, B. (2004). SPSS Explained (first). Taylor & Francis.
Hulin, C., Netermeyer, R., & Cudeck, R. (2001). Can a Reliability Coefficient Be Too High? Journal of Consumer Psychology, 10(1), 55–58.
Israel, G. D. (1992). Determination of sample size. In Program Evaluation and Organizational Development (Vol. 6).
Jain, M. K., Dalela, A. K., & Tiwari, S. K. (2010). Application of Fuzzy Mathematical Model in Assets-Liabilities. International Journal of Trade, Economics and Finance, 1(3), 247–253. https://doi.org/10.7763/ijtef.2010.v1.45
Jayanthi, M., & Umarani, R. (2014). Asset-Liability Management in Banks. CKPIM Business Review, 9(2), 10–25.
Joshi, S. P., & Sontakay, R. V. (2017). Review Paper on Asset Liability Management in Banking System. Imperial Journal of Interdisciplinary Research, 3(6), 670–678.
Kosmidou, K., Pasiouras, F., & Floropoulos, J. (2004). Linking profits to asset-liability management of domestic and foreign banks in the UK. Applied Financial Economics, 14(18), 1319–1324. https://doi.org/10.1080/0960310042000293146
Meena, A. K., & Dhar, J. (2014). An Empirical Analysis and Comparative Study of Liquidity Ratios and Asset-Liability Management of Banks Operating in India. International Journal of Social, Human Science and Engineering, 8(1), 4968–4974.
Nugroho, M., Halik, A., & Arif, D. (2020). Effect of CAMELS Ratio on Indonesia Banking Share Prices. Journal of Asian Finance, Economics and Business, 7(11), 101–106. https://doi.org/10.13106/jafeb.2020.vol7.no11.101
Riyazahmed, K., & Baranwal, G. (2021). Determinants of Credit Risk. International Journal of Accounting & Finance Review, 6(1), 53–71. https://doi.org/10.46281/ijafr.v6i1.1005
Romanyuk, Y. (2010). Asset-Liability Management : An Overview. In Bank of Canada Discussion Paper.
Ruparel, N. (2020). ( Re ) Thinking Positive Workplace /s : A Multisectoral Cross-Sectional Investigation. Birla Institute of Technology & Sciences- Pilani.
Seshadri, S., Khanna, A., Harche, F., & Wyle, R. (1999). Method for strategic asset-liability management with an application to the Federal Home Loan Bank of New York. Operations Research, 47(3), 345–360. https://doi.org/10.1287/opre.47.3.345
Singh, A., & Tandon, P. (2012). Asset - Liabilty Management in Indian Banking Industry. Asia Pacific Journalof Marketing & Management Review, 1(3), 121–132.
Singh, K. (2013). Asset-Liability Management in Banks: A Dynamic Approach. AIMA Journal of Management & Research, 7(2), 1–14.
Tanwar, J., Seth, H., Vaish, A. K., & Rao, N. V. M. (2020). Revisiting the Efficiency of Indian Banking Sector: An Analysis of Comparative Models Through Data Envelopment Analysis. Indian Journal of Finance and Banking, 4(1), 92–108. https://doi.org/10.46281/ijfb.v4i1.585
Tanwar, J., Vaish, A. K., & Rao, N. (2021). Optimizing Balance Sheet for Banks in India Using Goal Programming. International Journal of Accounting & Finance Review, 6(2), 81–101. https://doi.org/10.46281/ijafr.v6i2.1082
Tanwar, J., Vaish, A. K., & Rao, N. V. M. (2020). Mathematical Modeling of Asset Liability Management in Banks Using Goal Programming and Ahp. Indian Journal of Finance and Banking, 4(4), 1–19. https://doi.org/10.46281/ijfb.v4i4.899
Umarani, R., & Jayanthi, M. (2015). An Analysis of Asset-Liability Management in Indian Banks. International Journal of Business and Administration Research Review, 1(11), 179–183. https://doi.org/10.2139/ssrn.1760786
Ursachi, G., Horodnic, I. A., & Zait, A. (2015). How Reliable are Measurement Scales? External Factors with Indirect Influence on Reliability Estimators. Procedia Economics and Finance, 20(15), 679–686. https://doi.org/10.1016/s2212-5671(15)00123-9
Vij, M. (2001). Asset Liability Management in Banks and Financial Institutions: A case study of IDBI. Journal of Management Research, 1(1), 111–120. Retrieved from http://www.businessworld.in/article/Asset-Liability-Management-In-Financial-Institutions/04-11-2018-163493/
Vossen, B. van der. (2010). Bank Liquidity Management. Busienss/Business Administration. 39. https://doi.org/10.1007/978-0-230-37048-7_8
Abou-el-sood, H., & El-ansary, O. (2017). Asset-liability management in Islamic banks : evidence from emerging markets. Pacific Accounting Review, 29(1), 55–78. https://doi.org/10.1108/PAR-04-2016-0050
Adebisi, A. J., Alabi, A. W., & Fatimehin, K. (2020). Influence Of Risk Assets Impairment On Performance Of Nigerian Listed Deposit Money Banks. International Journal of Accounting & Finance Review, 5(3), 41–63.
Black, R., Brown, K., & Moloney, J. (2003). Asset and liability management : what does the future have in store ? Balance Sheet, 11(2), 32–38. https://doi.org/10.1108/09657960310480651
Chakraborty, S., & Mohapatra, S. (2009). An Empirical Study of Asset Liability Management Approach by the Indian Banks. The IUP Journal of Bank ManagementJournal of Bank Management, 8(3 & 4), 7–13.
Charumathi, B. (2008). Asset Liability Management in Indian Banking Industry - with special reference to Interest Rate Risk Management in ICICI Bank. Proceeding of the World Congress on Engineering, II(September).
Chatterjee, C., & Dutta, P. (2016). Exploring the Linkage between Profits and Asset–Liability Management: Evidence from Indian Commercial Banks. Paradigm, 20(2), 131–142. https://doi.org/10.1177/0971890716670707
Chattha, J. A., Alhabshi, S. M., & Meera, A. K. M. (2020). Risk management with a duration gap approach. Journal of Islamic Accounting and Business Research, 11(6), 1257–1300. https://doi.org/10.1108/JIABR-10-2017-0152
Chaturvedi, V. (2014). Asset Liability Management in Banks. International Journal of Engineering Technology, Management and Applied Sciences, 1(2), 2349–4476. Retrieved from http://www.ijetmas.com/admin/resources/project/paper/f201406281403951723.pdf
Das, A., & Ghosh, S. (2001). The Relationship Between Risk and Capital: Evidence from Indian Public Sector Banks. Reserve Bank of India Occasional Papers, 22(1, 2 and 3), 1–20. https://doi.org/10.1111/j.1813-6982.1961.tb02383.x
Dash, M., Venkatesh, K. A., & Bhargav, B. (2011). An Analysis of Asset-Liability Management in Indian Banks. SSRN Electronic Journal, 1–13. https://doi.org/10.2139/ssrn.1760786
Fabozzi, F. J., & Konishi, A. (1991). Asset/liability Management: Investment Strategies, Liquidity Requirements, and Risk Controls for Banks and Thrifts. Probus Publishing Company.
Fiedler, R., Brown, K., & Moloney, J. (2002). The dynamically projected balance sheet : implications for earnings , value and funds transfer pricing. Balance Sheet, 10(2), 17–21.
Goodman, L. S., & Langer, M. J. (1983). Accounting for Interest Rate Futures in Bank Asset-Liability Management. The Journal of Futures Markets, 3(4), 415–427. https://doi.org/10.1002/fut.3990030407
Haddad, A., Ammari, A. El, & Bouri, A. (2019). Impact of the Ownership Structure on the Financial Performance of Banks: Comparative Study between Conventional and Islamic Banks. International Journal of Accounting & Finance Review, 4(2), 50–63. https://doi.org/10.46281/ijafr.v4i2.442
Hair, J. F., Sarstedt, M., Hopkins, L., & Kuppelwieser, V. G. (2014). Partial least squares structural equation modeling (PLS-SEM): An emerging tool in business research. European Business Review, 26(2), 106–121. https://doi.org/10.1108/EBR-10-2013-0128
Hinton, P. R., Brownlow, C., McMurray, I., & Cozens, B. (2004). SPSS Explained (first). Taylor & Francis.
Hulin, C., Netermeyer, R., & Cudeck, R. (2001). Can a Reliability Coefficient Be Too High? Journal of Consumer Psychology, 10(1), 55–58.
Israel, G. D. (1992). Determination of sample size. In Program Evaluation and Organizational Development (Vol. 6).
Jain, M. K., Dalela, A. K., & Tiwari, S. K. (2010). Application of Fuzzy Mathematical Model in Assets-Liabilities. International Journal of Trade, Economics and Finance, 1(3), 247–253. https://doi.org/10.7763/ijtef.2010.v1.45
Jayanthi, M., & Umarani, R. (2014). Asset-Liability Management in Banks. CKPIM Business Review, 9(2), 10–25.
Joshi, S. P., & Sontakay, R. V. (2017). Review Paper on Asset Liability Management in Banking System. Imperial Journal of Interdisciplinary Research, 3(6), 670–678.
Kosmidou, K., Pasiouras, F., & Floropoulos, J. (2004). Linking profits to asset-liability management of domestic and foreign banks in the UK. Applied Financial Economics, 14(18), 1319–1324. https://doi.org/10.1080/0960310042000293146
Meena, A. K., & Dhar, J. (2014). An Empirical Analysis and Comparative Study of Liquidity Ratios and Asset-Liability Management of Banks Operating in India. International Journal of Social, Human Science and Engineering, 8(1), 4968–4974.
Nugroho, M., Halik, A., & Arif, D. (2020). Effect of CAMELS Ratio on Indonesia Banking Share Prices. Journal of Asian Finance, Economics and Business, 7(11), 101–106. https://doi.org/10.13106/jafeb.2020.vol7.no11.101
Riyazahmed, K., & Baranwal, G. (2021). Determinants of Credit Risk. International Journal of Accounting & Finance Review, 6(1), 53–71. https://doi.org/10.46281/ijafr.v6i1.1005
Romanyuk, Y. (2010). Asset-Liability Management : An Overview. In Bank of Canada Discussion Paper.
Ruparel, N. (2020). ( Re ) Thinking Positive Workplace /s : A Multisectoral Cross-Sectional Investigation. Birla Institute of Technology & Sciences- Pilani.
Seshadri, S., Khanna, A., Harche, F., & Wyle, R. (1999). Method for strategic asset-liability management with an application to the Federal Home Loan Bank of New York. Operations Research, 47(3), 345–360. https://doi.org/10.1287/opre.47.3.345
Singh, A., & Tandon, P. (2012). Asset - Liabilty Management in Indian Banking Industry. Asia Pacific Journalof Marketing & Management Review, 1(3), 121–132.
Singh, K. (2013). Asset-Liability Management in Banks: A Dynamic Approach. AIMA Journal of Management & Research, 7(2), 1–14.
Tanwar, J., Seth, H., Vaish, A. K., & Rao, N. V. M. (2020). Revisiting the Efficiency of Indian Banking Sector: An Analysis of Comparative Models Through Data Envelopment Analysis. Indian Journal of Finance and Banking, 4(1), 92–108. https://doi.org/10.46281/ijfb.v4i1.585
Tanwar, J., Vaish, A. K., & Rao, N. (2021). Optimizing Balance Sheet for Banks in India Using Goal Programming. International Journal of Accounting & Finance Review, 6(2), 81–101. https://doi.org/10.46281/ijafr.v6i2.1082
Tanwar, J., Vaish, A. K., & Rao, N. V. M. (2020). Mathematical Modeling of Asset Liability Management in Banks Using Goal Programming and Ahp. Indian Journal of Finance and Banking, 4(4), 1–19. https://doi.org/10.46281/ijfb.v4i4.899
Umarani, R., & Jayanthi, M. (2015). An Analysis of Asset-Liability Management in Indian Banks. International Journal of Business and Administration Research Review, 1(11), 179–183. https://doi.org/10.2139/ssrn.1760786
Ursachi, G., Horodnic, I. A., & Zait, A. (2015). How Reliable are Measurement Scales? External Factors with Indirect Influence on Reliability Estimators. Procedia Economics and Finance, 20(15), 679–686. https://doi.org/10.1016/s2212-5671(15)00123-9
Vij, M. (2001). Asset Liability Management in Banks and Financial Institutions: A case study of IDBI. Journal of Management Research, 1(1), 111–120. Retrieved from http://www.businessworld.in/article/Asset-Liability-Management-In-Financial-Institutions/04-11-2018-163493/
Vossen, B. van der. (2010). Bank Liquidity Management. Busienss/Business Administration. 39. https://doi.org/10.1007/978-0-230-37048-7_8
Published
2022-01-19
How to Cite
Tanwar, J., Vaish, A. K., & Rao, N. (2022). COMPARATIVE ANALYSIS OF EMPLOYEES’ PERSPECTIVE ON ASSET-LIABILITY MANAGEMENT IN BANKS. Indian Journal of Finance and Banking, 9(1), 47-64. https://doi.org/10.46281/ijfb.v9i1.1552
Section
Regular Research Article/ Short Communication Article
Copyright (c) 2022 Jyoti Tanwar, Arun Kumar Vaish, NVM Rao
This work is licensed under a Creative Commons Attribution 4.0 International License.
