Impact of Securitization on Indian Banks: An Empirical Study

Abstract

This paper aims to investigate the extent of securitization exposure of Indian banks. The study proposes a conceptual model which identifies variables which are impacted by securitization. The objective of the study is to validate the extent of increasing involvement of Indian banks in securitization activity i.e., whether securitization of assets has a positive impact on Indian banks. The conceptual model developed is tested by using correlation of securitization indicator to total assets, nonperforming assets, net and gross profits. Cluster Analysis is used to classify banks into active and passive based on securitization indicator. Correlation and T test is performed to check the significance and impact of securitization on profitability and stability of banks.