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Announcement Of Payment Banks And Stock Performance Of Commercial Banks In India

Author

Listed:
  • REDDY K, SRIHARSHA

    (Institute of Management Technology, Hyderabad, India)

  • BABU A, SARAT

    (Institute of Management Technology, Hyderabad, India)

Abstract

Purpose: To outline the significance of introduction of payment banks in India and to understand its impact on the stock performance of commercial banks in India. Design/methodology/approach: The stock performance of commercial banks is captured through abnormal returns using market model. Event study technique is employed to understand the performance of stocks around the announcement period. For the present study, we considered daily returns of 39 listed banks in NSE for the period of June 2014 till August 2015. Findings: The paper provides empirical insights about the impact of introduction of payments banks on the stock performance of Indian commercial banks. It was found that abnormal returns of Indian banking stocks were significantly negative on the date of announcement and negative abnormal returns continued for the next day. This indicates that markets perceived announcement of payment banks as a threat to the growth in the revenues of existing Indian banks. Research limitations/implications: Present study can be extended to understand the influence of payment banks on the revenues, customer base and market share of existing commercial banks. Practical implications: The paper includes implications for the banks, investors and regulators to understand the degree of influence of the payments banks on the stock performance of Indian Banks Originality/value: This paper fulfills an identified need to study how introduction of payment banks affect the stock performance of Indian commercial banks.

Suggested Citation

  • Reddy K, Sriharsha & Babu A, Sarat, 2018. "Announcement Of Payment Banks And Stock Performance Of Commercial Banks In India," Journal of Internet Banking and Commerce, , vol. 23(01), pages 01-12, April.
  • Handle: RePEc:ris:joibac:0058
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    More about this item

    Keywords

    Payment Banks; Event Study; Stock Performance;
    All these keywords.

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists

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