A Study of the Impact of Asset-Liability Management on the Profitability of Banks in India

Journal of Applied Management and Investments Volume 2, Issue 4, 2013

5 Pages Posted: 6 Mar 2014

See all articles by Mihir Dash

Mihir Dash

Alliance University - School of Business

Date Written: November 25, 2013

Abstract

Asset-liability management in banks is the strategic management of assets and liabilities to optimize profitability, while ensuring liquidity, and protecting against different risks. This study examines the impact of asset-liability management on the profitability for a sample of thirty-five public and private sector Indian banks.

The results of the study indicate that most of the banks are exposed to short term risk, with negative maturity mismatches in the 1-90 days bracket, and more so for public sector banks. However, the regression results indicate that there is an incentive to maintain negative maturity mismatch in the short-term, as this improves profitability.

Keywords: asset-liability management, profitability, liquidity, risk, maturity gap analysis

JEL Classification: G21

Suggested Citation

Dash, Mihir, A Study of the Impact of Asset-Liability Management on the Profitability of Banks in India (November 25, 2013). Journal of Applied Management and Investments Volume 2, Issue 4, 2013, Available at SSRN: https://ssrn.com/abstract=2403644

Mihir Dash (Contact Author)

Alliance University - School of Business ( email )

Chikkahagade Cross,
Chandapura-Anekal Road, Anekal
Bangalore, Karnataka 562106
India
9945182465 (Phone)

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