This research investigates the efficacy of Piotroski F-score to screen firms with good financial health and to identify early signs of financial distress in Indian banking stocks. This study complements existing empirical evidence which indicate that the venerable model can provide valuable insight for investment decision making and risk management.The evidence is drawn from valuation signals across leading private banks in India for a period ranging from 2014-2020. Piotroski F-score evaluates companies with a discrete number between zero and nine, the score facilitates determination of financial strength of the company. Higher score indicates better financial health and viceversa. The F-score is calculated as a sum of criteria which evaluates profitability signals, leverage and liquidity, sources of funds and operating efficiencies. In this study, each of these ratios have been analyzed to gain valuable insight on the banks (company-level). Analysis of Variance (ANOVA) of various ratios, ascertains intensity of relationship across banks (industry-level). This can help manage exposure in the portfolio as per the economic environment.The Piotroski F-score evaluates the generic financial health of the firm and indicates the direction in which the firm is headed. By studying individual factors, relative strength can be assessed. Piotroski F-score ranged between 0-7 for all the banks under study, indicating that none of them were a ‘compellingbuy’ (score 8 or 9) over the seven-year horizon. Some banks have consistently shown depleting F-score over at least 3 years, this can be interpreted as a signal of financial distress. It is evident that consistent monitoring of F-score empowers pro-active risk management.This work attempts to introduce Piotroski F-score as an integral valuation metric in evaluating Indian banking stocks. F-score can be used for initial screening, it’s consistent monitoring can facilitate optimized returns at risk-adjusted levels.
Cryptocurrencies are emerging as a prominent investment avenue among investors, they have been in the limelight in recent times due to ongoing debate on the regulation of these assets. Governing bodies across the world are facing the dilemma of acknowledging and regulating these instruments. This paper traces the current regulatory framework across the world and identifies the India specific challenges in regulating cryptocurrency. Some of the key challenges that the regulatory authorities face concerning crypto assets are: classifying cryptos as a mere asset class due to their complex features and intended purpose of creating an alternate means for barter, financial transactions and investments; decentralised nature of the assets which complicates levying of laws; money laundering, terrorist financing is rampant with digital currencies; cryptocurrency has been able to radically democratize the ability of start-ups to raise funds, regulation should continue to empower small businesses to borrow from a wide variety of funding community but monitor and curb activities which are not conducive for the business ecosystem. This paper ascertains the key challenges in regulating cryptocurrency by studying various documents, reports, journals across nations, aligning the challenges with an Indian context and tracing the changes in regulatory norms concerning crypto assets over the past decade, to assess the future of cryptocurrencies in India. This study is particularly important due to the lower rate of financial literacy, the constraints within which regulatory authorities continue to operate and the unique financial ecosystem of India. This bird’s eye view of regulatory norms and the existing challenges will enable regulators to build a framework that is conducive for growth and aligns with the existing financial ecosystem.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.