ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles by Sumon Kumar BhaumikSubscribe to Sumon Kumar Bhaumik

Banking Sector: Looking Ahead

Even as the cost efficiency and profitability of the public sector banks have improved significantly, recent research suggests that financial deepening involving banks may have suffered on account of the risk aversion of public sector banks, and their inability to effectively allocate credit in the face of credit risk. This article argues that it is time to bite the bullet and privatise the public sector banks and, in the interim, to reduce the risk associated with creation of bank assets by facilitating greater securitisation of credit.

Peasant Uprisings in Bengal

The history of the province of Bengal is marked by peasant uprisings during the second half of the 19th century. The surprising aspect of this phenomenon is that the political regime had been more oppressive during the Mughal era and during the rule of the British East India Company which ended in 1857. Using both mainstream and subaltern literature, this paper argues that the sudden rise of peasant revolutions in Bengal under the British crown can be explained by the theory of preference falsification on the part of the peasants before the period under discussion, which could help to explain such instances of social discontinuity in human behaviour.

RBI's Intervention in Foreign Exchange Market

In the aftermath of the currency crises around the world, the role of the central banks' interventions in the foreign exchange market has gained in importance. It is obvious that such intervention affects the exchange rate in two ways, first, by affecting the extent of excess demand in the foreign exchange market, and thereafter through a complex interplay of the macroeconomic variables. The stylised literature has addressed this issue by estimating the so-called offset coefficients, a method that is ad hoc and that is marked by the conspicuous absence of an underlying macro-model. In this paper, we build on the stylised Mundell-Fleming model, and derive an estimable reduced form expression that allows us to link exchange rate movements with the RBI's interventions. The model itself, and the subsequent empirical result indicate that the effect of RBI's intervention in the foreign exchange market is at best unclear. Specifically, given the time span of the data, the RBI's interventions in the market seem to have been ineffective.

Stock Index Futures in India-Does the Market Justify Its Use

Does the Market Justify Its Use?
Sumon Kumar Bhaumik The L C Gupta Committee, which was constituted to decide whether or not financial derivatives should be traded in India, is reportedly of the opinion that the Indian capital market is ready for options and index futures. Stock index futures, a multi-role derivative product which is more complex and interesting as a financial instrument, find the rationale for its use in the so-called efficient market hypothesis which argues that stock prices are random walks. This paper examines the role played by index futures, and argues that the Bombay Stock Exchange is significantly efficient, thereby justifying the introduction of stock index futures.

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