Net Stable Funding Ratio (NSFR) and Bank Performance: A Study of the Indian Banks
George Dotsis
Round 1
Reviewer 1 Report
The paper deals with an important issue in the field of economics and finance, related to the profitability and liquidity of banks. Such a research problem is fully in line with the thematic scope of the Journal. The layout of the content is correct. The conclusions of the research are correct, presented in an appropriate manner, supported by graphic illustrations. The selection of literature is correct, the literature used is rich and covers the most important positions in the scope of the undertaken problematic. Diverse sources were used, including mainly recent publications, indexed in Scopus and Web of Science databases. The title of the article is consistent with the content of the article and the research problem addressed. The research methods used are valid (panel data regression). The research period is relatively long (10 years; 2010-2019), and given that the peer-reviewed publication takes place in October 2022, it is worth considering updating the data (at least by 2020, and preferably also by 2021). The analysis covers 31 banks from a single country, which makes it largely impossible to generalise the results obtained (even to countries in the region), but provides a valuable case study for the Indian banking sector. In particular, the testing of heterogeneous functional models is valuable in order to demonstrate the correct form of the relationship between NSFR level and ROA, NIM and NPA values. In the methodological section, the authors should pay more attention to explaining the selection of control variables - as the literature identifies the importance of more important determinants of bank profitability, and the selection of only two of them should be supported by explanations for the omission of others (e.g. parameters of a macroeconomic nature, or issues related to the bank's business model). For better readability and to improve the aesthetics of the article, I suggest presenting the data with the research results in a table with up to 3 decimal places. The editorial correctness in the literature list should be re-examined.
Author Response
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Author Response.docx
Reviewer 2 Report
Endogeneity has to be explained more. How does endogeneity arise? Are some results expected because of the nature of banks themselves, on which the regulation was imposed? How would be one correct for this? What would be a good instrumental variable? Need some detailed economic discussion in that section rather than some vague tests, even if you don't perform the IV test.
Also, please check the formatting and for typos throughout, carefully.
Author Response
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Author Response File: Author Response.docx
Reviewer 3 Report
The author(s) should use bank-specific fixed effects to control for unobserved heterogeneity and possible also use dynamic GMM.
There is another very similar paper published in this journal which, strangely enough, the author(s) do not mention. You should include a discussion with respect to similarities/differences in terms of motivation, methodology empirical results and conclusion.
Sidhu, A.V.; Rastogi, S.; Gupte, R.; Bhimavarapu, V.M. Impact of Liquidity Coverage Ratio on Performance of Select Indian Banks. J. Risk Financial Manag. 2022, 15, 226. https://doi.org/10.3390/jrfm15050226
Author Response
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Author Response File: Author Response.docx
Round 2
Reviewer 3 Report
no comments.
