Are Basel-III norms good for Indian banks? Examining performance, efficiency and resilience variance in private-sector and public-sector banks
Journal of Economic and Administrative Sciences
ISSN: 1026-4116
Article publication date: 17 October 2023
Abstract
Purpose
The study examines whether the Basel-III regulations impact the financial performance, operational efficiency and resilience of Indian banks. Further, the study tests whether there is a variance in the impact between private- and public-sector banks.
Design/methodology/approach
The study uses panel data regression on data from 16 private- and 12 public-sector banks from the years 2016–2022. Random-effect estimation is used, and robust standard errors are calculated.
Findings
The main findings indicate that the Basel-III regulations related to capital and leverage boost public-sector banks' financial performance and resilience. However, a similar impact is not detected in the case of private-sector banks.
Practical implications
The findings signify that the Basel-III framework does not address the differences between public and private-sector banks. Therefore, the policy implications are of practical importance and indicate that Basel-III regulations should not be considered a one-size-fits-all type of bank. Instead, policymakers should consider the structural differences between private and public-sector banks concerning Basel-III regulations.
Originality/value
The study addresses a significant limitation of the Basel-III regulations, which, in their current state, somehow fail to account for the differences between the public- and private-sector banks.
Keywords
Acknowledgements
The authors sincerely thank the Editor(s) and all the anonymous referees for their time and efforts to help them modify this manuscript more constructively. Their efforts have enabled the authors to contribute more meaningfully to the existing body of knowledge through this work in this manuscript.
Funding: The authors hereby confirm that no funding was sought or received for the conduct and publication of this study and it has been carried out in an independent, free and fair manner.
Citation
Jaiwani, M. and Gopalkrishnan, S. (2023), "Are Basel-III norms good for Indian banks? Examining performance, efficiency and resilience variance in private-sector and public-sector banks", Journal of Economic and Administrative Sciences, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JEAS-05-2023-0129
Publisher
:Emerald Publishing Limited
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