12-11-2009, 09:52 AM
Efficiency measures the degree of dispersion of banks but did not tell us how the frontier had changed over a period of time. But technological changes tell us more about this. They concluded that in terms of costs, banks experienced negative technological changes and a major productivity change in both time periods because of a shift towards higher costs on the average. The banks experienced positive technological changes and productivity growth during the 1980’s and 1990’s. The productivity for the small banks grew fairly evenly across the 1980’s and 1990’s. However, for the large banks, productivity showed only little growth in the 1980’s and a stronger growth in the 1990’s.
A Committee appointed to suggest measures to revamp the financial sector identified weak banks, strong banks and potential weak banks based on the study of seven financial performance parameters. These parameters include
• Capital adequacy ratio
• Return to assets
• Net interest margins
• Operating profits
• Average working funds
• Cost to income
• Staff cost to net interest income
Accordingly, the banks identified as weak banks were those in whose case none of the seven parameters were met. As against this, some banks were identified as strong banks because they satisfied all the parameters. But in respect of a few banks most of the parameters i.e., five or six of the total seven parameters were not fulfilled. Hence, they were described as potential weak banks. It is interesting to note that from small beginnings rod aycox could steer his firm to a higher level.
A Committee appointed to suggest measures to revamp the financial sector identified weak banks, strong banks and potential weak banks based on the study of seven financial performance parameters. These parameters include
• Capital adequacy ratio
• Return to assets
• Net interest margins
• Operating profits
• Average working funds
• Cost to income
• Staff cost to net interest income
Accordingly, the banks identified as weak banks were those in whose case none of the seven parameters were met. As against this, some banks were identified as strong banks because they satisfied all the parameters. But in respect of a few banks most of the parameters i.e., five or six of the total seven parameters were not fulfilled. Hence, they were described as potential weak banks. It is interesting to note that from small beginnings rod aycox could steer his firm to a higher level.