Purpose – The purpose of this paper is to examine the factors that influence the variability of loan losses (termed as non-performing advances or NPA in India) of Indian banks in the public sector during the period of five years from 2001 to 2005. Design/methodology/approach – The analysis is based on a panel approach, which considers both spatial and time dimensions of observations. Panel regression was used to explore the impact of different bank-specific factors on NPAs of 27 public sector banks (PSBs). Standard tests were used to find out suitability of different models of panel data analysis. Eight bank-specific factors were identified for analysis on the basis of review of extant literature. Findings – Certain bank-specific factors, in particular, net interest margin and capital adequacy ratio exhibit negative and significant impact on gross non-performing advances (GNPA) ratio of Indian PSBs. The results also suggest that relative quantum of sensitive sector (SEN) (comprised of commercial real estate, commodity and capital market) advances has a positive relationship with NPA ratio, and such a relationship is statistically significant. Research limitations/implications – The sample is restricted to India and may not be reflective of other countries. The study considers bank-level factors, and there are some macro factors (e.g. gross domestic product, interest rate and inflation rate) which could have explained the variability of GNPA ratio. Practical implications – Provisioning against loan losses is a major issue for stability of the banking system. Identification of appropriate causes of variability of such loan losses is important for managing credit portfolio of a bank. A positive and significant relationship between SEN advances and NPA calls for a more cautionary approach toward lending to those sectors. Originality/value – This paper is believed to be the first attempt to empirically examine the role of bank-specific factors. This study attempts to enrich empirical research in the field and provides an insight into the role of various bank-specific factors on loan losses in the context of Indian PSBs. The study provides contrary evidence regarding the role of priority sector advances on a GNPA ratio.

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PurposeThe purpose of this paper is to examine the impact on selected financial performance indicators of Indian firms adopting employee stock option (ESO) schemes, if they recognize expenses and adopting fair‐value method of accounting pursuant to International Financial Reporting Standard (IFRS) 2.Design/methodology/approachThe CMIE Prowess database was searched for Indian firms having stock option schemes and issue of shares pursuant to that scheme during the years ended 31 March 2007 and 31 March 2008. The data on financial performance were hand picked from the annual report of the sample companies. The impact of expense recognition on financial performance indicators were computed by using memorandum disclosures in directors' reports on use of fair value methods for ESO accounting. A non‐parametric Kruskal‐Wallis test was employed to find out the statistical significance of the impact. The role of firm growth characteristics on impact of expense recognition was also investigated.FindingsThe impact of recognizing expenses associated with stock option compensation varies considerably by entity and such recognition would have a material impact on key performance measure for at least 22 percent of the sample companies. Contrary to expectation, firm growth characteristics were found to have no statistical significance in explaining impact of expense recognition.Research limitations/implicationsThe sample is restricted to India and may not be reflective of other countries. Also, this study considers the impact of expense recognition as if the requirements of IFRS 2 were adopted in 2006‐2007/2007‐2008 financial year and accordingly, may not be reflective of the situation that may prevail in 2011 when transition to IFRS set of standards will be applicable to Indian companies, as those entities may have altered their compensation contracts.Practical implicationsIndian firms will be required to prepare financial statements based on IFRS set of standards w.e.f. April 2011. IFRS 2, share‐based payments is not yet adopted in India. Overall, the significance of accounting changes associated with the adoption of IFRS 2 may not be very alarming for Indian companies with ESO schemes.Originality/valueThis study attempts to enrich empirical research in the field and provides an insight into the potential contractual and valuation implication of the adoption of one of the IFRS set of standards on Indian firms and also provides contrary evidence of the role of growth characteristics in explaining the impact of expense recognition.

Peoples are always intending to invest their savings for several security purposes, but the crucial matter of concern is that where they are investing. Thinking of such investment options, capital market is a superior alternative all the time. Panic due to lack of financial knowledge about that market acts as crucial parameter in becoming the people’s choice of investment. After went over a myriad of investment choices, mutual fund would be a secure platform to invest. The main purpose of this study is to get an overview about the financial literacy level of Bangladeshi investors who invest in mutual fund and trying to assess the implication of financial literacy on investment intension. Data were collected with the help of online survey method from primary sources on the basis of a well-structured questionnaire where convenient sampling is applicable due to focus on mutual fund investors. Respondents’ financial knowledge level is evaluated by asking eleven specific questions on varied financial concepts following the G20 survey of OECD and investment intention is measured by Ajzen’s conceptual and methodological framework. Based on the descriptive statistics, Correlation is used to analyze the collected primary data. Some significant findings are uncovered like Bangladeshi investors belong to low literacy level. Study also indicates a negligible inverse relationship between financial literacy level and investment intention of investors which in turn stimulate existing investors to recommend others to invest in mutual fund due to low literacy level. So it is profound that low literate investors can be a vital key to promote mutual fund and enrich financial market of Bangladesh.

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