Consequent upon the introduction of prudential norms as an integral part of financial sector reforms, the present paper investigates the relationship between changes in risk and capital in the Indian banking sector. A dynamic, multivariate panel regression model is formulated wherein changes in capital ratio depend on its lagged value, a range of conditioning variables and regulatory dummies. Our analysis reveals that: (i) the regulatory framework needs to be designed to encourage individual banks to maintain higher than stipulated capital levels to reflect their differential risk profiles; and (ii) there is no conclusive evidence of risk aversion among Indian banks. Copyright © 2003 John Wiley & Sons, Ltd.

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Strongly periodic series occur frequently in many disciplines. This paper reviews one specific approach to analyzing such series viz. the harmonic regression approach.In this paper the five major methods suggested under this approach are critically reviewed and compared, and their empirical potential highlighted via two applications. The out-of-sample forecast comparisons are made using the Superior Predictive Ability test, which specifically guards against the perils of data snooping. Certain tentative conclusions are drawn regarding the relative forecasting ability of the different methods.

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