Behaviour of Equity Investors towards Investment in the Banking Sector in the Context of Bank Frauds in India
Keywords:
Retail Investor, Investor Behaviour, Banking Sector, Finance, Liberalisation, Privatisation, Globalisation, corporate governance, bank fraudsAbstract
Banking sector is the engine of growth of all modern economies. A sound banking sector is therefore, essential to build up of investors’ confidence in the stock market. The governance of bank based on the principle of prudential norms is an indicator of sound economy. Indian banking sector has witnessed drastic changes since the inception of Liberalisation, Privatisation and Globalisation policies in the year 1991. But when viewed from the perspective of ethical practices, financial distress and corporate governance, today the banking sector suffers from its own set of challenges. Banking frauds has risen to Rs.18170 crore during the financial year 2017, which is considered to be one of the major hurdles the banking sector in India now faces. Top lenders in banking sector such as SBI, PNB and Canara Bank are already piled up with frauds. It is imperative that banks take this rising graph of bank frauds as a serious threat to this sector and ensure that steps are taken to reduce the same. As a result of this there has been constant volatility in the value of the shares of these banks. The objective of investor is to minimize the risk involved in investment and maximize the return from investment. This has been the main drive behind the volatility of share price. This paper aims to analyse the extent, pattern & reasons of stock price volatility of the selected shares of the banking industry. The paper also intends to analyse the impact of frauds on the share prices of the shares of the banking industry.
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