This study aims to investigate the size–leverage relationship in the context of India—one of the important emerging economies. Most of the studies that have tested the relationship between firm size and leverage have been conducted in the developed economies. For testing the much-discussed size–leverage relationship, we employ a large sample of firms for the study over a time span of 17 years from 2002 to 2018. Our findings support the negative size–leverage relationship, confirming the propositions of the pecking order theory. The study has implications for policymakers regarding the development of corporate debt market in India.

After the financial crisis, the Indian banking system has accumulated a mountain of bad loans which has crippled the banking sector and halted the credit flow to the industry. Several immediate causes for the bad loan crisis have been pointed out. However, poor market discipline, the ultimate root cause of the bad loan crisis, has not been paid adequate attention. This study seeks to investigate how effectively the market disciplinary forces, captured through information disclosure, interbank deposits, concentration and ownership structure, incentivise the Indian banks to adopt prudential risk management by enhancing their risk‐weighted capital ratio. The findings of the study show that information disclosure and interbank deposits do not induce prudential risk behaviour among banks in India. However, with increasing concentration in the banking sector, a higher level of information disclosure effectively induces banks to maintain higher capital ratios, but inter‐bank deposits do not have any significant effect on bank capital. We also observe that government banks maintain lower capital ratios as compared to private banks indicating government banks' higher expectation of government bailout.

Effective risk management in a multi-business firm or a bank having diverse business segments demands a coordinated approach. A piece-meal approach to managing different risks is likely to increase the overall costs. Risk aggregation and optimization is a challenging task faced by practitioners and academics alike. Different models and methodologies of risk aggregation have been developed by researchers for integrating and optimizing various types of risks. This paper presents a brief review of literature on risk aggregation and risk optimization and presents the important facets of risk management.

The study provides an overview of the evolution of ALM from the idea of asset-liability matching to sophisticated techniques like stochastic programming. This can help ALM practitioners in banks and other entities to choose a suitable ALM strategy for managing their portfolios efficiently.