Ijc Oct Dec2016

Print : ISSN : 19-512X | Online : ISSN : 2454-6801
THE INDIAN JOURNAL

OF COMMERCE
(A Quarterly Refereed Journal Published by the Indian Commerce Association)
Vol.69 No. 4 October-December 2016
Tej Singh Socio-Economic Impact of Micro Financing through Self-

and Parul Mittal Help Groups in Mewat District: An Econometric Analysis
S.C. Das Financial Literacy among Indian Millennial Generation

and their Reflections on Financial Behaviour and Attitude:
An Explanatory Research
C. K. Sonara, Dhaval Sharma An Empirical Study of Corporate Environmental

and Ashav Patel Accounting and Reporting of Different Groups of Selected
Companies in India
Ayekpam Ibemcha Chanu A Study on Efficiency of Select Regional Rural Banks

and Shibu Das in India
Dipen Roy and DCF, Strategic Approach and Multi-Factor Model: An

Dhruba Charan Hota Empirical Study to Explore a Rational Approach to
Capital Budgeting
Sanjay Kumar Patel and Performance Evaluation of Hybrid Mutual Fund Schemes
Pramod Kumar Verma in India: An Empirical Study of ELSSs
Anoop Pandey and Modeling for Determinants of Mutual Fund Family

Pooja Chaturvedi Performance: Marked Remission to Indian Mutual Fund
Industry
Amanpreet Kaur Impact of Gender Diversity on Corporate Reputation of

Indian Companies
Prof. H.K. Singh - Managing Editor
With Secretariat at : Faculty of Commerce, Banaras Hindu University,

Varanasi, (U.P.) - 221005
Visit : www.icaindia.info, www.ijoc.in
Email : [email protected], [email protected]
The Indian Journal of Commerce
A Quarterly Refereed Journal
Aims and Objectives : Indian Journal of Commerce, started in 1947, is the quarterly publication of the Indian Commerce Association to
disseminate knowledge and information in the area of trade, commerce, business and management practices. The Journal focusses on
theoretical, applied and disciplinary research in commerce, business studies and management. It provides a forum for debate and deliberations
of academics, industrialists and practitioners.
MANAGING EDITOR
Prof. H.K. Singh
Faculty of Commerce
Banaras Hindu University, Varanasi, Uttar Pradesh, India
JOINT MANAGING EDITORS
Dr. Subhash Garg Dr. Ajay Kr. Singh Dr. Sanket Vij
Professor, Department of Management & Associate Professor Professor
Dean & Director, Centre for Research, Faculty of Commerce and Business Department of Management
Innovation & Training, The IIS University Delhi School of Economics, BPS Mahila Vishwavidyalaya, Khanpur
Jaipur, Rajasthan University of Delhi, Delhi (Sonepat), Haryana
ASSOCIATE EDITORS
Dr. S.B. Lall Dr. Meera Singh Dr. Shweta Kastiya Sapan Asthana
Vanijya Mahavidyalaya UP Autonomous PG College The IIS University MUIT
Patna University, Patna Varanasi Jaipur Lucknow
EDITORIAL CONSULTANTS
Prof. David Ross Prof. J.K. Parida
University of Southern Queensland, Australia Utal University, Bhubneshwar, Odisha.
Currently in HELP University, Malaysia Prof. Parimal H. Vyas
Prof. Suneel Maheshwari Vice Chancellor, M.S. University of Baroda, Gujarat
Indiana University of Pennsylvania, Pennsylvania, USA Prof. R. Vinayak
Prof. Ing. Elena Horska Professor, DSPSR, Rohini, Delhi
Professor of Marketing Prof. Arvind Kumar
Slovak University of Agriculture in Nitra, Slovak Republic University of Lucknow, Lucknow, Uttar Pradesh
Prof. Walter Terry Parrish Prof. B.K. Singh
ICE Academy, Smethwick (Birmingham) Campus, United Kingdom Faculty of Commerce, BHU, Varanasi, UP
Prof. Doc. Ing. Petr Sauer Prof. O.P. Rai
University of Economics, Prague, Czech Republic Banaras Hindu University (BHU), Varanasi, Uttar Pradesh
Prof. M. Saeed Prof. D.P.S. Verma
Minot State University, North Dakota, USA Ex Professor, Faculty of Commerce & Business
Prof. Andras Nabradi Delhi School of Economics, University of Delhi, Delhi
University of Debrecen, Debrecen, Hungary Prof. P. Purushottam Rao
Prof. Syed Ahsan Jamil Formerly Professor, Osmania University, Hyderabad
Dhofar University, Oman Prof. P.R. Agrawal
Prof. B.P. Singh Vice- Chancellor, V.B.S. Purvanchal University, Jaunpur, U.P.
Chairman, Delhi School of Professional Studies & Research (GGSIP Dr. Babban Taywade
University), Rohini, Delhi Dhanwate National College, Nagpur, Maharashtra
Prof. S.P. Bansal Dr. T.A. Shiware
Vice-Chancellor, IGU, Rewari KPB Hinduja College, Mumbai, Maharashtra
Prof. B. Ramesh Prof. K. Eresi
Ex Dean of Commerce, Goa University Bangalore University, Bengaluru, Karnataka
Dr. Subodh Kesharwani Prof. K.S. Jaiswal
SMS,IGNOU, New Delhi MG Kashi Vidyapeeth, Varanasi, Uttar Pradesh
Prof. Coskun Can Aktan Prof. Sanjay Baijal
Dokuz Eylül University, Izmir, Turkey DDU Gorakhpur University, Gorakhpur, Uttar Pradesh
Prof. R.K. Jena Prof. Sandip K. Bhatt
Utkal University, Bhubaneswar, Odisha Sardar Patel University, VV Nagar, Anand, Gujarat
Dr. R.U. Singh Prof. Umesh Holani
Magadh University, Bihar Ex Dean of Commerce, Jiwaji University, Gwalior, M.P.
Prof. Popp Jozsef Prof. Debabrata Mitra
Deputy Director, AERI, Budapest, Hungary North Bengal University, Bardwan, West Bengal
Prof. Hamid Saremi Prof. Bhagwan Das
Vice-Chancellor, Islamic Azad University, Quchan, Iran FM University, Balasore, Odisha
Dr. Rakesh Gupta Prof. Narender Kumar Garg
Griffith University, Australia Department of Commerce, M D University, Rohtak, Haryana.
Prof. L.N. Dahiya
MD University Rohtak, Haryana
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The views expressed in the articles and other material published in The Indian Journal of Commerce do not reflect the opinions of the ICA.
THE INDIAN JOURNAL
OF COMMERCE
(A Quarterly Refereed Journal Published by the Indian Commerce Association)
Vol. 69 No. 4 October-December 2016
CONTENTS
q Editorial 3-4
Prof. H.K. Singh
Socio-Economic Impact of Micro Financing through Self-Help Groups in Mewat District: 5-15
An Econometric Analysis
Tej Singh and Parul Mittal
Financial Literacy among Indian Millennial Generation and their Reflections on Financial 16-34
Behaviour and Attitude: An Explanatory Research
S.C. Das
An Empirical Study of Corporate Environmental Accounting And Reporting Of Different Groups 35-47
of Selected Companies in India
C. K. Sonara, Dhaval Sharma and Ashav Patel
A Study on Efficiency of Select Regional Rural Banks in India 48-59

Ayekpam Ibemcha Chanu and Shibu Das
DCF, Strategic Approach and Multi-Factor Model: An Empirical Study to Explore a Rational 60-71
Approach to Capital Budgeting
Dipen Roy and Dhruba Charan Hota
Performance Evaluation of Hybrid Mutual Fund Schemes in India: An Empirical Study of ELSSs 72-80
Sanjay Kumar Patel and Pramod Kumar Verma
Modeling for Determinants of Mutual Fund Family Performance: Marked Remission to Indian 81-93
Mutual Fund Industry
Anoop Pandey and Pooja Chaturvedi
Impact of Gender Diversity on Corporate Reputation of Indian Companies 94-99

Amanpreet Kaur
( 1 )
NOTES FOR CONTRIBUTORS
Our global and political environment is bubbling with great hopes and aspirations of pink health and rising graph
of Trade, Industry and Commerce all around. As such, it becomes my humble and honest duty, belonging to the
world of academics, to interact and share with some instrumental guidelines for the contributors and participants
in the forthcoming issues of the Indian Journal of Commerce.
Research along with its practical implications and usage and utility in the field of business studies has great
relevance today. It is therefore, suggested that Papers based on application oriented research are more welcome;
especially in the fields of industry, commerce, business studies and management areas. The papers must include
tables, diagrams, illustrations and such other tools to support the different and divergent viewpoints. As such, the
length of a paper including all these has to be cautiously controlled and should not exceed 20 double space pages.
Short communications relating to review articles, report of various conferences, summary/views on several
governments' reports, database issues etc. should also not exceed more than 5 double spaced pages and are invited
to be published. We also welcome book-reviews and summary of Ph. D. dissertations but not in more than two
double spaced pages. Care should be taken that whatever manuscripts are sent for publication in this journal
should not have been published elsewhere any time before.
As is the common practice, two copies of the manuscripts typed in double space on A4 size bond paper should be
submitted and the electronic version of the paper must accompany 3.5 inch high density floppy diskette in PC
compatible WORD 7.0 document format.Papers without floppy/CD will not be accepted. It is informed that all the
papers/contributions submitted for publication in the journal will be subjected to peer reviews and the decision of
the Editorial Committee will be final.
First page of the Paper should consist of the title of the paper, name(s), of the author(s) along with all the other
required details and the abstract should not exceed more than150 words. Second page should start with the title of
the paper again to be followed by the text. In the captions for the tables, figures and column headings in the tables,
the first letter of the first word should be capitalised and all other words should be in lower case, except the proper
nouns. Footnotes in the text should be numbered consecutively in plain Arabic superscripts. All the footnotes, if
any, should be typed under the heading 'Footnotes' at the end of the paper immediately after Conclusion.
Follow the Author -date (Harvard) System in-text reference: e.g. Saurabh (2014) observed that….A Study
(Shantanu et. L. 2015) found that…..When it is necessary to refer to a specific page(s), cite it in the text as: Saurabh
(2014 P. 105) observed that…A study Saurabh 2014a, Saurabh 2014b, Saurabh 2014c, so on and so forth.
It is to be noted that only cited works should be included in the 'References' which should appear alphabetically at
the end of the paper. Follow the reference citation strictly in accordance with the following examples.
Book : Singh, H. K. 2015. Mutual Funds Market. New Delhi: Kanishka publishers.
Journal Article : Singh, Meera 2015. Journal of Indian School of Political Economy. Jan-March,2015, Vol-22, Nos 1,
pp 34-48.
Government Publication : Government of India, Ministry of Communications, Department of
Telecommunications 2015. Annual report. New Delhi.
Chapter in a Book : Gilberto Mendoza, 2015, A Premier on Marketing Channels and Margins. Pages 257-276 in
Prices, Products and People (Gregory J. Scott, ed.) London. Lynne Rienner Publishers.
All copyrights are with the Indian Commerce Association and the authors. The authors are responsible for
copyright clearance for any part of the content of their articles. The opinions expressed in the articles of this journal
are those of the authors, and do not reflect the objectives or opinion of the Association.
All the manuscripts should be sent to Prof. H.K.Singh, Managing Editor, The Indian Journal of Commerce,
Banaras Hindu University, Faculty of Commerce, Banaras Hindu University, Varanasi 221005, Mobile:
09415264509, E-mail: [email protected] • [email protected]
Published by Prof. H. K. Singh on behalf of the Indian Commerce Association
( 2 )
FROM THE DESK OF THE MANAGING EDITOR
Prof. H.K. Singh

Faculty of Commerce
Managing Editor, Indian Journal of Commerce
Banaras Hindu University, Varanasi
Ex Vice Chancellor, Maharishi University of IT, Lucknow
President, Indian Association for Management Development
E-mail: [email protected] • Mobile: 09415264509
“Satisfaction does not come with achievement, but with effort. Full effort is full victory.” -- Mahatma
Gandhi. The same has been our experience related to ICA (Indian Commerce Association) and its
prestigious journal the Indian Journal of Commerce. We have been successful in acquiring a beautiful
piece of land at Greater Noida but sincere effort will lead to timely construction of ICA building. The
journal has got vital acceptance and circulation in academic world but various indexing on the lines of
Scopus, WoS (Web of Science), ICI (Indian Citation Index) indexing is required. Scopus is a
bibliographic database containing abstracts and citations for academic journal articles. It covers nearly
22,000 titles from over 5,000 publishers, of which 20,000 are peer-reviewed journals in the scientific,
technical, medical, and social sciences (including arts, business and humanities). Web of Science
(previously known as Web of Knowledge) has been an online subscription-based scientific citation
indexing service originally produced by the Institute for Scientific Information (ISI), for providing a
comprehensive citation search. It provides prompt access to multiple databases that reference cross-
disciplinary research, facilitating in-depth exploration of specialized sub-fields within an academic or
scientific discipline. Indian Citation Index (ICI) is also an online bibliographic database containing
abstracts and citations/references from academic journals for extensive search and analysis like
comparing more than one institutions in terms of contribution (total articles published), subject area,
and number of citation received etc. In our maiden attempt, the Indian Journal of Commerce will
endeavor to be registered in Scopus indexing for attaining better attraction with various regulating
agencies including UGC.
The Indian experience of tackling insurgency in Jammu & Kashmir, North East States etc. through
demonetization are both varied and reach. Black money has been the parallel economy in our country.
In a televised address on November 8, 2016 by Indian Prime Minister Shri Narendra Modi, it was
announced that banknotes of `500 and `1000 would cease to be legal tender from midnight. Automatic
teller machines (ATM) at some places were closed on 9 and 10 November. Government organizations
have brought out new notes. The Government of India had accepted the proposal of RBI in bringing
out `2000 banknotes and a new version of the `500. Now, it's a great challenge for planners to
formulate policies for inclusive growth to solve the problems of poverty, unemployment,
backwardness, low productivity and standard of living.
69th All India Commerce Conference organized under the guidance of conference secretary Prof.
Arvind Kumar, Dean Faculty of Commerce, Lucknow University was dedicated to efficacious,
substantial and significant topics such as- (a) Startup India , (b) Indian Financial System,
(c) Globalization of Markets, (d) Tourism and Hospitality, (e) Women Empowerment, and (f)
Empirical Researches in Accounting & Finance. The EC of ICA decided to start one specific session
exclusively for research scholars in the name of ICA Research Scholar Award so that they must get
proper chance for deliberation. The present issue comprises the papers nominated for M.M. Shah
( 3 )
Memorial research gold medal and ICA research scholar awards for 69th AICC. I have an ardent
hope that you all will be benefited with these research papers of the current issue and will revert
with your valuable comments. The present issue attempts to address the issues of substantial and
significant importance such as (a) Multi factor model of capital budgeting, (b) Key issues and
challenges of BASEL III, (c) Performance evaluation and determinants of Mutual Funds, (d)
Socio-economic impact of Micro Financing, (e) Growth, performance and efficiencies of RRBs in
India, (f) Gender diversity and corporate reputation, and (g) Financial Literacy etc. We have
made sincere attempts to facilitate our readers by including empirical and comprehensive
research papers from diverse areas, so that topics of different fields must be available in this issue.
I express my sincere appreciation to our learned readers and community at large for the warm
welcome and resounding support to the journal and ICA. We are working hard to better
understand our readers and to deliver a valuable product to you on a regular basis with attractive
layout of the journal. I expect all of you will continue to reach out to us any time through e-mail
and mobile with feedback and suggestions for bringing out appropriate amendments in this
reputed journal. As you all are aware, now our journal is completely an on-line journal, so you are
requested to browse it through networks. I conclude by quoting few lines from Bhagwad Geeta,
krodhaadbhavati sammohah sammohaatsmritivibhramah |
smritibhramshaadbuddhinaasho buddhinaashaatpranashyati ||
(From anger comes delusion; from delusion, confused memory; from confused memory the ruin
of reason; from ruin of reason, man finally perishes.)
Last but not the least I would like to quote a doha by famous Indian poet Kabir,
Kabira Kiya Kutch Na Hote Hai, Ankiya Sab Hoye
Jo Kiya Kutch Hote Hai, Karta Aur Koye
(All things happen as per Gods wish, it just seems that we are doing them.)
Prof. H.K. Singh
( 4 )
Vol.69, No. 4, October-December 2016
Socio-Economic Impact of Micro Financing through

Self-Help Groups in Mewat District: An
Econometric Analysis
ABSTRACT
Purpose: To present overview of the salient socio-economic characteristics of the sample
households and to analyze the impact of SHGs on employment and income level of the
members.
Design/Methodology/Approach: The present study is empirical in nature as it is mainly
Design/Methodology/Approach
based on primary data which was collected through interview schedule and FGD during field
survey. A multistage random sampling method was adopted for the study. The collected data
was analyzed with the help of various statistical tools like Frequency, Percentages, Means,
Standard Deviations, and Coefficient of Variation. To prove the hypotheses, some tests like
t-test (paired), Z test and Chi-square (a 2) test also used in the study. The collected data was
also analyzed with the help of Econometric Analysis (OLS Model) to measure the impact of
microfinance programme.
Findings
Findings: The impact of SHGs on employment and income level of members was significant.
Both the programmes had shown little difference in results. The average level of income
earned form IGAs was higher in case of MDA in comparison to SGSY. SHGs helped members
to increase their income level through economic activities for providing them better living
conditions and making them independent. Thus, SHGs had positive impact on the employment
and income of members. Microfinance programmes raised members above poverty line and
enhanced their socio economic status.
Research Implications/Limitations
Implications/Limitations: The study was considered only in one district of Haryana
i.e. Mewat District.
Practical Implications
Implications: Contributes to the body of knowledge on impact and success of
microfinance programme and its implications for government and non government agencies
and organisations for policy formulation regarding microfinance.
Originality/Value: The paper identifies a framework of relevant values and facilities that
will be of use to those interested in this field.
INTRODUCTION
Microfinance refers to loan; saving, insurance, transfer services and other financial
products targeted at low levels clients. Microfinance in India is mainly provided through
Self-Help Groups (SHGs), Microfinance Institutions (MFIs) and some other
methodologies. The network of many financial institutions like public and private sector
commercial banks, co-operative banks, regional rural banks (RRBs) and MFIs is used to
provide microfinance services to the poor people. Microfinance programme claims to
Key words provide the poor an access to capital and give them opportunities to climb the economic
Microfinance, SHGs, Income ladder1. Microfinance, by its name refers the whole journey of financial and non financial
& Employment Level and services which covers skill up gradation, entrepreneurship development rendered to
Mewat. the poor and needy people for the purpose of enabling them to overcome poverty.
National Bank for Agriculture and Rural Development (NABARD) defines micro-finance
as: “provision of thrift, credit and other financial services and products of very small
(5)
Socio-Economic Impact of Micro Financing through Self-Help Groups in Mewat District: An Econometric Analysis
amounts to the poor in rural, semi-urban and urban areas such as ABN-Amro, City financial etc. is also showing
for enabling them to raise their income levels and improve interest in microfinance programme. In India, Micro
living standards” (NABARD, 2001). Finance operates mainly through TWO channels i.e. SHGs
– Bank Linkage Programme (SBLP) Model (SHGs) and
In terms of demand of microcredit, there are 3 segments –
Micro Finance Institutions (MFIs) (SHGs, JLG and Grameen
at the very bottom, there are landless agriculture labourers
Groups).
and manual labourers. The next market segment is of small
& marginal farmers and rural artisans, weavers and self- SHG is a registered or unregistered voluntary association
employed informal sectors such as hawkers, vendors, of poor people of 10-20, from the same socio-economic
workers in household micro-enterprises. The third segment background, involving primarily in saving and credit
is of other farmers who have gone for commercial crops activities. It can be all women members group, all men
and other engaged in dairy farming, poultry, fisheries etc2. members group or even a mixed group. SHG are also
M-CRIL3 provides an estimate for the annual demand at popularly called as DWACRA groups after the programme
Rs. 480 billion with an average household credit demand i.e. development of women and children in rural areas.
of Rs. 8000. The RBI (2009) estimated that the overall However, over 90% of these are women members group.
demand for microfinance is around Rs. 200000 crores out Savings, loans, loan-repayments are taken care of at the
of which only 10% is being met by existing MFIs and banks group level. These groups are in turn linked to a financial
through the SBLP. On the Supply side, the Indian or a micro-finance institution for sourcing of additional
microfinance sector is characterized by a variety of funds as well as depositing their savings4. Best examples
microfinance service providers. These includes apex of this type of technology are the Self-Help Group Bank
financial institutions like NABARD, SIDBI and Linkage Programme in India, the Programme Hubungan
government owned societies like RMK (Rashtriya Mahila Bank Danksm (PHBK) project in Indonesia, and the
Kosh), Commercial Banks, RRBs, formal sector financial Chikola groups of K-REP in Kenya (Satish 2005).
institutions, Cooperatives societies, SHG federations,
REVIEW OF LITERATURE
MACS, private sector companies, NBFCs, societies, trusts
etc. New private sectors banks, most notably ICICI bank, For the purpose of better understanding, Review is
but also AXIS bank and HDFC bank are actively seeking presented in the tabular form.
exposure in the microfinance sector. International banks
Researchers Objectives State/ District Conclusions of The Study

Kum aran (1997) To stud y the functio ning And hra Mo ney co ntributed by m e mbe rs w as po o led to ge the r and use d a
o f SHGs Prad esh re vo lving fund to d isburse loans o n a p rio rity basis. The me m bers also
starte d
Puhazhe nd hi & To e xam ine the im pact o f All o ver Ind ia 33% rise in average annual inco m e fro m pre to p ost SHG situatio n.
Satyasai (2000) m icro finance o n inco m e (11 state s) 40% o f this incre m e ntal inco m e w as gene rated by no n-farm se cto r
le ve l. activitie s.
Dahiya et al. (2001) To analyze the so cio - So lan (HP) The me m be rs w e re m ainly invo lve d in small busine ss and
e co no m ic status of service/ p ro fessio n. The re w as a consid erable incre ase in annual
w o rk ing SHGs inco me in p ost- SHG pe riod .
Mishra et al (2001) To e xam ine the im pact o f Faizabad (UP) The survey sho w ed that SHGs have he lp ed to incre ase the inco m e o f
SHGs o n ge ne ratio n o f the p articip ants by 10-15%.
inco m e and e m p lo ym e nt
amo ng be ne ficiarie s.
Nirm ala e t al. (2004) To stud y facto r affecting Po nd iche rry The study sho w e d that aro und 80% o f the SHG m e mbe rs had initiate d
the e arning o f SHGs. IGAs and the m ajo rity o f them w e re e ngage d in non-farm activitie s
that w e re trad itio nal and less re m une rative .
Sarangi (2007) Im p act o f m icro finance on MP Im pact asse ssme nt re sult show e d the significant po sitive e ffe ct o f
rural p oo r HH. p rogram me p articipatio n o n incre ase in the inco m e o f the HH. He
co nclud e d that cre d it to serve as a so le instrume nt o f p o ve rty
alleviatio n d id no t se e m to be p lausible , w itho ut o the r co rrob orative
m echanism that he lp in increasing the po te ntial o f cre dit use by the
p oo r o r the small farm ers.
Bansal (2010) Im p act o f m icro finance on Punjab Micro finance in Punjab w as pro vid e d thro ugh SBLP. Lo ans used fo r
p o ve rty, e m plo ym ent and p rod uctive purp o se dire ctly influe nce d the le ve l o f inco me and
w o m e n e mp o w e rm ent. e mp lo yme nt o f m em be rs.
(6)
Sure nd e r (2011) To exp lo re the Acro ss Ind ia SHG had the cap ab ility o f ge ne rating e mp loyme nt. It m ight the o ne o f
e m plo yme nt gene ration w ay thro ugh w hich pro blem o f unem p lo yme nt co uld b e re m o ve d
thro ugh SHG and in fro m the entire w o rld . And the p ro ce d ure o f gro w th and d evelo p me nt
d e pth info rm atio n on co uld b e achieve d.
vario us aspe cts o f se lf
e m plo yme nt through
SHGs.
Batra (2012) To analyze the im p act o f Haryana The stud y o bse rve d the im p ro ve me nts in asse ts base am o ng the
m icro finance on HH m em be rs. Ho w eve r, m any m e mb ers had no t purchase d any
w e lfare . p rod uctive ite m s and loan am o unt fo rm the Bank / MFIs/ Gro up w as
also the m ain so urce of finance to acquire the re asse ts.
Batra (2012) To stud y the structure and Haryana The se le cte d sche m e s w e re SGSY, SCRIA and Sw aymsid d ha. The
functio ning o f SHGs. stud y id e ntified the vario us pro ble ms such as irre gularity in m ee tings,
low le ve l o f sk ill and k no w le d ge , lack o f training am o ng m e m bers.
Ram ak rishna & To study the SBLP. Tek k alak o te The stud y pro ve d that SBLP w as the be st te chnique in p o ve rty
k haja (2013) alleviatio n o f the rural p o o r and the SHG m em be rs w ere highly
invo lved in IGAs. This pro gramm e had bee n e ffe ctively e xecute d and
e valuated p ro pe rly.
Chatterje e (2014) To find o ut the ro le o f We st Be ngal SHG enco uraged w o me n to fo rm vo luntary asso ciatio n and e m erge as
Se lf-He lp Group s to w ard s a gro up of save r-cum -b orro w e rs. In fact, any financial assistance , if
the eco no mic utilize d p ro pe rly ge nerate s gainful e mp loyme nt o pp o rtunitie s.
e m po w e rm ent o f w o m e n. Positive sign o f e mp lo yme nt ge ne ration w as fo und in rural eco no my
o f Khe juri. Inco m e has a favo rable e ffect o n consum ption e xp end iture
in ge neral and o n e ducatio n, health, so cial and familial status o f
m em be rs in p articular.
To e xam ine the im pact o f Nagaland The re sults re ve ale d the cred it to have significantly im pro ve d their
Nirm ala & SHGs m icro -financing o n e co no mic status and ho use ho ld w e llbe ing. It also le d to their
Ye ptho mi (2014) p o ve rty alleviation and e mp o w e rme nt, inde p end e nce and so cial p articip ation. The study
w e ll-be ing o f the rural re co m me nd e d training the m for be tter co m pe titive ne ss and
p o o r w o me n. e mp lo yme nt activitie s, be sid e s assisting w ith m ark eting facilitie s.
OBJECTIVES OF THE STUDY SGSY/NRLM (Swaranjayanti Gram Swarozgar Yojana/

National Rural Livelihood Mission). SHG members were
The objectives of the present study are:
selected from each of selected SHGs randomly. A total of
• To study the socio-economic profile of SHG’s 400 respondents (320 SHG members from 80 SHGs and 80
members in Mewat district. non-members of same socio-economic background) were
select as final samples. The collected data was analyzed
• To measure the impact of microfinance programme
with the help of various statistical tools like Percentages,
on employment and Income level of participants.
Means, Standard Deviations, and Coefficient of Variation.
HYPOTHESIS OF THE STUDY Some information was also collected through Personal
Interviews (PIs) and Focused Group Discussion (FGDs)
H0: There is no impact of SHGs in raising the
which was used at appropriate places to support the
employment and income level of the participants.
quantitative data. To prove the hypotheses, some tests like
H1: Microfinance programme has significant impact on t-test (paired), Z test and Chi-square (a 2) test also used in
employment and income level of the participants. the study. The collected data was also analyzed with the
help of Econometric Analysis (OLS Model) to measure the
RESEARCH METHODOLOGY impact of microfinance programme.
The present study is empirical in nature as it is mainly

based on primary data which was collected through
STATUS OF MICROFINANCE IN HARYANA &
interview schedule and FGD during field survey. A
MEWAT
multistage random sampling method was adopted for the
study. Out of four divisions of Haryana state, Gurgaon In Haryana, total No. of rural Households are 3159222
division was selected. For the purpose of present study, and total rural population is 15868322. Total No. of BPL
one district i.e. Mewat district was selected from Gurgaon households are 858389 and percentage of BPL Households
Region. The availability of the programmes/schemes was (HH) is 27.17. Out of all BPL Households, form SC category
also identified in the sampled district. The selected schemes are 430905, under BC category is 267567 and 786862
for the study are MDA (Mewat Development Agency) and
(7)
Landless BPL.5 To tackle the problem of poverty and for is promoting SHGs under IFAD programme in Mewat
rural development, different schemes of central and state district of Haryana. Besides these, some NGOs are also
government for rural as well as urban areas such as working for the promotion of Microfinance and progress
Sampoorna Gramin Rojgar Yojna (SGRY), Integrated of SHGs. The results of numbers of SHGs in India, Haryana
Rural Development Programme (IRDP), District Rural and Mewat are presented in Table 1. It shows that numbers
Development Agency (DRDA), Mewat Area Development of SHGs now are increasing.
Project (MADP), Mahatma Gandhi National Rural
DATA ANALYSIS AND INTERPRETATION
Employment Guarantee Scheme (MGNREGS) and Non
Government Organizations (NGOs). In Haryana, Socio-Economic Profile of Sample Members
Microfinance is promoted through different programmes/
It provided an overview of the salient socio-economic
projects by various departments and agencies such as the
characteristics of the sample households and SHG
Women and Child Development Department (WCDD) has
participants covered under the study. The sample consists
promoted Self Help Groups under the Programme for
of 320 microfinance programme participants from 80
Advancement of Gender Equity (PAGE) and
operating SHGs and 80 non participants of the same socio-
Swayamsiddha; Japanese project named as Aravali
economic background of Mewat district of Haryana.
promoting by Forest Department; Women’s Awareness &
Management Academy (WAMA) has promoted the Distribution of SHGs by Socio-Economic Characteristics
Swashakti project while Banks are promoting SHGs under of Members
NABARD’s SBLP; DRDA is promoting SHGs under
Swarnjayanti Gram Swarozgar Yojana (SGSY) and Mewat Age of the Respondents: The age of respondents plays a
Development Agency (MDA) is promoting SHGs under major role in the selection of IGAs under the programme.
IFAD programme in Mewat district of Haryana. Besides The average age of the group members was 37.3 years. The
government departments, agencies and banks, some mean age of non participants was 38.2 years. The average
international, national and regional NGOs are also age of respondents under MDA was 39.4 years and in
working for the promotion of Microfinance and progress SGSY, it was 35.2 years. It means that all members were
of SHGs. In Haryana, community based organizations are near about the age of 37-39 years and the members around
also working like SCRIA. In Haryana, SHG-Bank Linkage this age were mostly engaged in dairy production and
Programme (SHG-BLP) continues to be the foundation of farming (Table 2).
the Indian microfinance scene with 79.6 lakh SHGs Gender: Under MDA, mostly groups were female based
Table: 1 Number of SHGs groups but in SGSY there were also many groups which
have male members. But we selected only female members
India Haryana Mewat groups for the better measurement of the progress of SHGs
Years Number of Number of Number and microfinance programme. The reason behind this was
SHGs (In Lakh) SHGs (In Lakh) of SHGs the sincerity and better performance of female members
2007-08 5625941 23570 2812
groups than male members groups. There were all the
2008-09 6121924 33257 3398
females’ members in both MDA and SGSY. The total
2009-10 6953631 36762 3619
2010-11 7462570 35319 4148 respondents are 100% females. In non participants, there
2011-12 7960349 44184 4477 were also all the females members (Table 2).
2012-13 7317551 42580 5046
Religion: As far as religion of respondents is concerned,
2013-14 7429500 43029 5791
2014-15 7592404 45589 5932 there were maximum Muslims respondents (54.06%). It is
followed by Hindu (45.94%). In control group, 41.25% were
Source: NABARD’s Reports on Microfinance of various years.
Hindu respondents and 58.75% were Muslims members.
covering over 10.3 crores households saving with the Programme wise distribution shows that in MDA, 61.25%
formal banking system with savings balance of over Rs. were Muslims and 38.75% were Hindu. Under SGSY, there
6,500 crores as on 31st March 2015. In Mewat district, were 67.50% Hindu and 54.06% were Muslims. There were
Microfinance is promoted under different programmes/ no respondents found during the survey that belongs to
projects by various departments and agencies such as Sikh and Christian community. It indicated that all the
Banks are promoting SHGs under NABARD’s SBLP; members were either Hindu or Muslim (Table 2).
DRDA is promoting SHGs under SGSY & SJSRY and MDA
(8)
Caste: Distribution of members by caste shows that there illiterate and 67.50% were literate respondents. While in
were majority of Other Backward Caste category SGSY, illiterate respondents were 41.25% and rest were
respondents (42.19%). it is followed by Schedule Caste literate. It shows that mostly members were not educated
(30.62%), General (22.81%) and Backward Caste (4.38%). in all cases.
Under MDA, there were 20.17% General category
Economic Status of the Respondents
respondents, 3.75% BC, 47.92% OBC and 19.16% SC. There
were maximum Muslims respondents in MDA groups. Employment Level of Respondents: As it is cleared from
While in SGSY, 3.75% respondents belong to General the table 3 that 47.50% respondents were housewife which
category, 6.25% to BC, 25.00% to OBC and 65.00% to SC. is followed by casual employees (27.50%), Self Employed
SGSY had majority of SC respondents and it mainly (23.13%) and Contractual employees (1.88%). In control
emphasized on BPL families. In control group, out of total group, 43.75% were housewife, 28.75% of members were
80 respondents, 47.50% were OBC which is followed by Casual employees, and 22.5% were self employed. Under
SC (32.50%), General (16.25%) and BC (3.75%). (Table 2) MDA, 41.25% of members were housewife which is
followed by casual employees (30.42%) and self employed
Education Level: Table 2 also shows the distribution of
(25.38%). While in SGSY, 66.25% were housewife and 15%
members by education level. The education level of
were self employed, 18.75% were Casual labourers. The
respondents is an important feature for the functioning of
survey shows that except SGSY, in all cases more than
the groups. Education affects the management and
50% of members were working women.
organization of SHGs. Out of total respondents surveyed,
34.69% were illiterate and rests are literate. In control Occupation: The occupation of the respondent’s shows
group, 47.50% non participants were illiterate and 52.5% that majority of respondents were labourers (34.52%)
were literate members. The percentage of illiterate members which followed by agriculturist/farming (26.79%),
was high in SGSY groups. Under MDA, 32.50% were Business/shop/traders (24.40%) and artisan/craftsman
(14.29%). In control group, maximum respondents were
Table: 2 Distributions of SHGs by Socio-Economic
involved in agriculture/farming. Programme wise
Characteristics of Members
distribution of occupation of members shows that under
Particulars MDA SGSY Total Control
Average Age 39.4 35.2 37.3 38.2 MDA, 36.88% members were labourers, 29.08% were
of Members agriculturist, 20.57% of members were traders and only
Distribution of Members by Gender
Male 0(0.00) 0(0.00) 0(0.00) 0(0.00) 13.47% were artisans. While in SGSY, the occupation of
Fem ale 240(100.00) 80(100.00) 320(100.00) 80(100.00) majority of respondents (44.44%) was business/trade/
Others 0(0.00) 0(0.00) 0(0.00) 0(0.00) shop. It is followed by labourers (22.22%), artisans
Distribution of Members by Religion
Hind u 93(38.75) 54(67.50) 147(45.94) 33(41.25) (18.52%) and agriculturist (14.82%). (Table 3)
Muslim 147(61.25) 26(32.50) 173(54.06) 47(58.75)
Sikh 0(0.00) 0(0.00) 0(0.00) 0(0.00) Income Level: The approximate average monthly income
Christian 0(0.00) 0(0.00) 0(0.00) 0(0.00) of household after joining the group from all sources was
Distribution of Members by Caste
General 70(29.17) 3(3.75) 73(22.81) 13(16.25)
Rs. 6334. In control group, it was Rs. 4530. Programme
BC 9(3.75) 5(6.25) 14(4.38) 3(3.75) wise, in MDA the mean value of income of members was
OBC 115(47.92) 20(25.00) 135(42.19) 38(47.50) Rs. 7921 and in SGSY, it was Rs. 4747 (Table 3).
SC 46(19.16) 52(65.00) 98(30.62) 26(32.50)
Distribution of Members by Literacy Level Sources of Income
Income: The main source of income of members
Illiterate 78(32.50) 33(41.25) 111(34.69) 38(47.50)
Can Sign 37(15.42) 14(17.50) 51(15.94) 13(16.25) was agriculture and labour. In control group, respondents
Primary 52(21.67) 10(12.50) 62(19.37) 7(8.75) mostly earned through the cultivation and labour work
Mid dle Class 14(5.83) 6(7.50) 20(6.25) 5(6.25) (Table 3). Under MDA, the major source of income (40%)
High Scho ol 28(11.67) 8(10.00) 36(11.25) 9(11.25)
Se nior 6(2.50) 7(8.75) 13(4.06) 4(5.00) was cultivation which followed by laborer (36.67%),
Se cond ary business/trade (22.08%). In SGSY, 48.75% of members had
Grad uatio n 8(3.33) 2(2.50) 10(3.13) 3(3.75)
the agriculture as source of income. It is followed by
Technical/ P.G 17(7.08) 0(0.00) 17(5.31) 1(1.25)
& Abo ve business/trade (30%) and Labour (21.25%).
Total 240(100.00) 80(100.00) 320(100.00) 80(100.00)
Source: Computed from Survey Data. Expenditure: The approximate average monthly
Note
Note: Figures given in parenthesis show percentage. expenditure of household was Rs. 5597.50. In control
group, it was Rs. 5280. Programme wise, in MDA the mean
(9)
value of expenditure of members was Rs. 6875 and in SGSY, Economic Status: Out of total members surveyed, 45% were
it was Rs. 4320 (Table 3). from the BPL families and 55% were from APL families. In
control group, BPL respondents were 52.50% and 47.50%
Land Holding Pattern: The land holding pattern also
of the respondents were from the APL families. Under
shows the economic status of the respondents. Only 36.25%
MDA, 26.67% of members were from BPL families. While
of members had land and 63.75% of members were found
in SGSY, 100% members were from BPL families. It
to be landless. In control group, 55% respondents were
indicated that SGSY was mainly concerned with BPL
landless. In MDA, landless members were 59.58% and
families while MDA was not targeted at BPL HH but for
76.25% in SGSY. The average size of land was 1.05 acres
women empowerment (Table 3).
and in control group, it was 1.2 acres. Under MDA, 16.49%
of members had land on her name while in SGSY; it was Impact of SHGs on Employment and Income Level
10.53%. In control group, it was 11.11% (Table 3).
This section analyzes the impact of SHGs on employment
and income level of the members. It is important to study
the occupational status of respondents in order to know
Table 3: Economic Status of the Respondents
about the livelihood support system of members and non
Particulars MDA SGSY Total Control members. This is done through hypothesis testing with
Status of Employment of Respondent
Self Em p loyed 62(25.83) 12(15.00) 74(23.13) 18(22.5)
the help of Econometric Analysis.
Regular 0(0.00) 0(0.00) 0(0.00) 0(0.00)
Casual 73(30.42) 15(18.75) 88(27.50) 23(28.75) Income Generating Activities after Joining the Group
Co ntractual 6(2.50) 0(0.00) 6(1.88) 4(5.00)
Ho usew ife 99(41.25) 53(66.25) 152(47.50) 35(43.75) Table 4 shows that total of 70.62% of members and their
Occupation of Respondent HH was involved in economic activities after joining the
Agriculture/ Farm i 41(29.08) 4(14.82) 45(26.79) 21(26.25)
ng group at the time of survey. But still 29.38% of members
Labour 52(36.88) 6(22.22) 58(34.52) 6(7.50) had not started any Income Generating Activity even after
Business/ Sho p / Tra 29(20.57) 12(44.44) 41(24.40) 15(18.75)
d er
joining the SHG. The highest number of members who
Artisan/ Craftsm an 19(13.47) 5(18.52) 24(14.29) 3(3.75) had started economic activities was in MDA (74.17%)
Average Monthly 4350 2270 3310 -
Income of HH
followed by SGSY (60%). In SGSY, all the members of group
before joining had not started IGAs but they utilized loan amount for
SHG (app.) (Rs.)
their family members and with the help of loan amount
Average Monthly 7921 4747 6334 45301
Income of HH after they settled their HH. The members of SGSY stated that
joining SHG (app.)
(Rs.)
they had spent the loan amount on the fulfillment of their
Sources of Income basic needs. They had invested loan amount on education
Cultivation/ Agricu 96(40.00) 39( 48.75) 135(42.19) 42(52.50) and Career of children, marriage of their daughters etc. to
lture
Ho use Rent 3(1.25) 0(0. 00) 3(0.94) 0(0.00) settle the life of their spouse. The chi-square test shows the
Em p lo ym ent/ Labo 88( 36.67) 17( 21.25) 105(32.81) 27(33.75) no relation between both programmes regarding the
ur
Investm ent 0(0.00) 0(0.00) 0(0.00) 0(0.00) selection of economic activities. Both the programmes were
Business/ Trade 53(22.08) 24( 30.00) 77(24.06) 11(13.75) independent to each other.
Average Monthly 6875 4320 5597.50 5280
Expenditure of Table 4: Income Generating Activities after Joining the
HH2 (app.) (Rs.)
Landholding Pattern of SHGs’ HH Group
Yes 97(40.42) 19(23.75) 116(36.25) 36(45.00)
No 143(59.58) 61(76.25) 204(63.75) 44(55.00) Particulars MDA SGSY Total
Average Size of 1.6 0.5 1.05 1.2 Selection of IGAs
Land (in acres)
Ye s 178(74.17) 48(60.00) 226(70.62)
Land on the Name of any Female Member of Family
Yes 16(16.49) 2(10.53) 18(15.52) 4(11.11)
No 1 62(25.83) 32(40.00) 94(29.38)
No 81(83.51) 17(89.47) 98(84.48) 32(88.89) Ho = Selection of IGA is independent of Programmes.
Economic Status 2 = 5.804, significance at 5% significance le ve l.
BPL 64(26.67) 80(100.00) 144(45.00) 42(52.50) He nce , Null Hyp o thesis is re jected .
APL 176(73.33) 0(0.00) 176(55.00) 38(47.50) Source: Computed from Survey Data.
Total 240(100.00) 80(100.00) 320(100.00) 80(100.00)
Source: Computed from Survey Data. Note
Note: Figures given in parenthesis show percentage.
Note
( 10 )
Kind of Income Generating Activities undertaken after few HH invested the loan amount for Dari Making, Basket
Joining the Group Making, Sewing Machine/Embroidery, Tent, Handloom/
handicraft and Food/Tea Stall. While in SGSY, 16.66% of
It is observed from the table data that the highest number
members were engaged in livestock related activities. It
of members and their HH were involved in livestock related
was followed by Hand fan (12.5%), Fodder (10.42%),
activities (14.60%) followed by Kirana Store/Petty Shop/
Agriculture (10.42%) and Floor Mill (8.33%). There were
Bakery (11.07%), Fodder (11.07%), Agriculture (10.62%),
fewer members involved in Bangle Shop/Cosmetic Shop,
Floor Mill (8.85%), Hand Fan (8.41%), Shoe Making (7.08%),
Labour/Domestic Servant, Floor Mill, Shoe Making, Dari
Bangle Shop/Cosmetic Shop (6.19%), Food/Tea stall
Making and Chalk/Pot Making (Table 5).
(5.31%), Anganwadi Workers (3.10%), Cycle Rickshaw
(3.01%), Sewing Machine/Embroidery (2.65%), Tent Income Earned from the Activity
(2.65%), Handloom/Handicraft (2.21%), Dari Making
People join the SHG for the purpose of enhancing their
(1.77%), Pickle/Papad/Jam/Squash Making (1.50%),
living of standard and earn livelihood. Through SHGs,
Labour/Domestic Servant (1.33%), Poultry Farm (1.33%),
people can involve in economic activities with financial
Basket Making (0.88%), Chalk/Pot Making (0.44%) and
help by the group in the form of loan form SHG and Bank.
Camel Cart (0.44%).
The main purpose of any programme or scheme of
Table 5: Kind of Income Generating Activities Microfinance through SHGs is to raise people above poverty
undertaken after Joining the Group line and help then to earn livelihood by SHGs. In order to
Particulars MDA SGSY Total measure the success of both programmes and impact of
Bangle Sho p/ Co sme tic 12(6.75) 2(4.17) 14(6.19) SHGs on employment and income level of members,
Sho p
respondents were asked about their experiences in the
Livesto ck 25(14.04) 8(16.66) 33(14.60)
(Buffalo / Cow / Shee p/ Go at) changes in the level of income. Table 6 shows that the
Labo ur/ Dom estic Servant 2(1.12) 1(2.08) 3(1.33) highest average income was observed in MDA (Rs.
Kirana Sto re/ Petty 22(12.36) 3(6.25) 25(11.07) 3571.37) followed by SGSY (Rs. 2477.08). The value of |Z|
Sho p/ Bake ry
shows the significant difference in the level of income
Pickle/ Pap ad / Jam/ Squash 0(0.00) 0(0.00) 0(0.00)
Mak ing under both programmes. In MDA and SGSY both, mostly
Fo od / Tea Stall 12(6.75) 0(0.00) 12(5.31) members improved their income level through livestock
Fo d d er 20(11.23) 5(10.42) 25(11.07) related activities and agriculture. A paired t-test is used to
Agriculture 19(10.68) 5(10.42) 24(10.62) measure the significance of difference between the mean
Mud ha Mak ing 0(0.00) 0(0.00) 0(0.00)
incomes of participants. The test shows that the difference
Floo r Mill 16(8.99) 4(8.33) 20(8.85)
Sho e Making 14(7.87) 2(4.17) 16(7.08) between the mean incomes of the participants of the
Cycle Rickshaw 0(0.00) 0(0.00) 0(0.00) programme in the pre and post situation is significantly
Sew ing 3(1.68) 3(6.25) 6(2.65) different at one percent level under both programmes. After
Machine/ Em bro id ery
joining the group, mostly members under both programmes
Camel Cart 0(0.00) 1(2.08) 1(0.44)
Po ultry Farm 1(0.56) 2(4.17) 3(1.33) started economic activities with the help of which they
Te nt 3(1.69) 3(6.25) 6(2.65) raised their employment and income level.
Hand Fan 13(7.30) 6(12.5) 19(8.41)
Fisheries 0(0.00) 0(0.00) 0(0.00) Impact of Microfinance on Employment & Income Level:
Hand lo o m/ Hand icraft 5(2.81) 0(0.00) 5(2.21) An Econometric Analysis
Piggery 0(0.00) 0(0.00) 0(0.00)
Dari Mak ing 2(1.12) 2(4.17) 4(1.77) The impact of microfinance on different dimensions such
Anganwad i Work ers 7(3.93) 0(0.00) 7(3.10) as employment & income level has been estimated by
Baske t Mak ing 2(1.12) 0(0.00) 2(0.88) applying the Ordinary Least Square (OLS) model. The OLS
Chalk / Po t Mak ing 0(0.00) 1(2.08) 1(0.44)
technique was used to analyze the effect of different
Source: Computed from Survey Data.
explanatory variables like income, amount of loan taken,
Note
education, occupation of husband, membership of
In MDA, the main activities adopted by members were participants, caste etc. on the probability of participation
livestock (14.04%), Kirana Store/Petty Shop/Bakery of HH in the group based microfinance programme
(12.36%), Fodder (11.23%), Agriculture (10.68%), Floor Mill examined. These variables were selected after measuring
(8.99%), Shoe Making (7.87%) and Hand Fan (7.30%). Very the correlation among them. Microfinance has significant
( 11 )
Table 6: Income Earned from the Activity
Particulars MDA SGSY Total

Income Earned from IGAs
Mean Inco m e 3571.37 2477.08 3024.23
S.D 256.66 248.04 252.35
C.V 7.19 10.01 8.6
H o = Mean Inco m e earned from IGAs is sam e und er bo th p ro gram m es.
|Z| = 33.879, At 5% level o f significance, the critical value o f Z for o ne tailed test = 1.645.
The calculated value |Z| > critical value of Z at 5% level. Hence, at 5% level o f significance, null hypo thesis is
rejected . So, Mean Inco m e earned fro m IGAs is d ifferent und er bo th p rogram m es.
Programmes Average Income of Participants per month (in Rs.) Value of ‘t’
Pre- SHG Po st -SHG Increm ent
MDA 4350 7921 3571 9.674*
SGSY 2270 4747 2477 5.792*
H o = There is no im p act of SHGs in raising the em p loym ent and incom e level o f the p articipants.
*Significant at 1% level o f significance. So null hyp othesis is rejected and after jo ining the SHG, d ue to involvem ent in
IGAs, m em ber’s incom e level has been raised . Thus, there is significant im p act o f SHGs o n em p loym ent and incom e
level o f particip ants.
Source: Computed from Survey Data.
Note
impact on the employment and income level of the Table 7: Measuring the Impact of Microfinance on
participants in Mewat District. It is presented in the below Employment and Income Level of Participants
model:
Explanatory Coef. t P>t
IGAINC = â0 + â1 (InLOAN) + â2 (JOIN) + â3 (EDU) + â4 Variables
(CASTE) + â5 (OCHUS) + â6 (TINHH) + â7 (PMDA) + â8 InLOAN 0.406 5.18* 0.000
JOIN 0.032 0.34 0.583
(PSGSY) + U.
EDU 0.347 0.65 0.467
Where, IGAINC = Income earned from th income CASTE (d um m y) 0.212 0.46 0.516
OCHUS (d um m y) 0.173 2.74 0.020
generating activities (IGAs).
TINHH 0.206 2.08 0.045
InLOAN = Log value of total loan taken frm bank as well PMDA (d um m y) 0.728 8.3* 0.000
as from the group. PSGSY (d um m y) 0.594 6.2* 0.000
CONSTANT 2.295 2.75* 0.000
JOIN = Length of membership in the group (In years) Number of observations=226, R2 = 0.78, F(8,217)
= 43.8, Prob.>F = 0.000
EDU = Education level of respondent. (1=lterate, 0
otherwise) Source
Source: Computed from field survey.
CASTE = Caste of the respondent. (1 for Gneral/BC/OBC, The results of the analysis show that the amount of loan
0 for SC) plays a significant role in the improving the income level
of the HH. Programme wise analysis shows that the
OCHUS = Occupation of Husband.TINHH = Total income members of MDA and SGSY have better position in terms
of Household. of increase in income and employment level. The
PMDA = Programme dummy 1 for MDA, 0 otherwise. occupation of Husband and total income of HH has played
crucial role in this. Other variables like length of
PSGSY = Programme dummy 1 for SGSY, 0 otherwise. membership, education and caste play insignificant roles.
â0 = Constant, â1 = Coefficients and U = error term. The value of R2 = 0.78. It indicates that about 78% of the
total variation of the dependent variable was explained
by the independent variables (Table 7).
( 12 )
SUGGESTIONS Batra, Vikas (2012). Factors Determining Women Self Help

Group Members and their Patterns: A Field
To raise the standard of these poor rural people and
Experience in Rural Haryana, Economic Affairs
generate employment & income level for them, it is needed
(Quarterly Journal of Economics), 57(1), 107-118.
to help members become literate, improve the skill &
capabilities of members, conduct training programme for Batra, Vikas (2012). Impact of group based Microfinance
members, motivate them to start economic activities and on income, Assets and Expenditure: An Empirical
try to discuss about the issues and problem of members as study of three programmes in rural Haryana,
well as of groups. For the upliftment of the society in Mewat Research journal (Arts), MDU, Rohtak, vol.11, no. 1,
District, there must be taken some action for capacity April 2012. Pg. no. 93-105.
building, training & literacy programmes, formation of
Batra, Vikas (2012). Management and Governance of Self
capital, supply of resources etc. for the poor rural people.
Help Groups in Rural Areas: A Study of
CONCLUSION Microfinance Programmes in Haryana”,
International Journal of Management Sciences, 1(1).
The impact of SHGs on employment and income level of
members was significant. Both the programmes had shown Borbora, S. and Mahanta, R. (2008). Microfinance Through
little difference in results. The average level of income Self Help Groups and its Impact, A Case of Rashtriya
earned form IGAs was higher in case of MDA in Grameen Vikas Nidhi-Credit and Saving Programme
comparison to SGSY. Under both programmes, members in Assam, 42-43.
were involved in livestock related activities and
C.K. Mehrotra (1997). Linkage Banking – State Bank’s
agricultural activities. But in comparisons to MDA
Experience, State Bank of India, Monthly Review,
members, SGSY members had less land and belonged to
36 (2), 63-71.
BPL families so their expenses were more. SGSY members
also faced the problem of space for livestock. Despite some Chatterjee (2014). Self-Help Groups and Economic
members were not involved any IGAs but they helped their Empowerment of Rural Women: A Case Study,
HH in education and career with the help of loan amount International Journal of Humanities & Social Studies,
through SHGs. The priority of members was to satisfy their 2 (6), 152-157.
basic needs through SHGs. Some members had also settled
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their life in well manner with the help of SHGs. Besides,
(2001). Socio-economic Evaluation of Self-help
SHGs helped members to increase their income level
Groups in Solan District of Himachal Pradesh:
through economic activities for providing them better
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Yunus, Muhammad (2006). Is Grameen Bank Different Mean value of income of the non-members at the time of
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_contentm &task=view&id =27 & Itemid=176 members at the time of field survey.
8
[Accessed on: 29.11.2007]. Even after joining the SHGs, some members didn’t start
any IGAs because they used their loan for
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1
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09_chapter%201.pdf amount for their family and children. After fulfilling
2
Batra, Vikas and Sumanjeet. “The State of Microfinance the ir basic needs, they start to involve in IGAs.
Dr. Tej Singh Dr. Parul Mittal

Chairperson and Professor Assistant Professor
Dept. of Commerce, Indira Gandhi University Dept of Commerce, KLP College
Meerpur (Rewari) Rewari1
Email : [email protected] Email : [email protected]
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Financial Literacy among Indian Millennial

Generation and their Reflections on Financial
Behaviour and Attitude: An Explanatory Research
S.C. Das
ABSTRACT
Objectives
Objectives: The main focus of the study is to measure the level of financial literacy among
Indian millennials and also to examine the dependency of standardised financial knowledge
construct on select (twelve) control variables. Further, the study has specific objective of
understanding the reflections of financial literacy on financial behaviour and attitude.
Research Approach & Design
Design: The study is explanatory (causal) in nature based on structured
questionnaire with 210 respondents of PG students of marketing, accounting/finance and HR
group (Millennials) of an institution for national importance complying sampling adequacy
deVaus (2002) selected through proportionate stratified sampling technique. Data have been
analysed through Man-Whitney (U), and Kruskal-Wallis (H) test, Kolmogorov-Smirnov
and Factor analysis with varimax rotation (reliability and convergent validity of construct).
Finally, Ordinal regression (PLUM) and Multinomial Logistic Model (MLR) have been applied
for assessing the influences of financial literacy on financial knowledge and literacy. The
survey followed the standard measures comprising 50 questions/statements and is divided
into four sections, namely demographic profile adapted from Chen and Volpe 1998; Lusardi
et al 2010; Guiso and Jappelli,2008; Chen and Volpe,1998); financial behaviour adapted from
Banco de Portugal (2010), financial attitude Chen and Volpe (1998) and mixed measures of
financial knowledge adapted from Jumpstart Survey (2008); Lusardi et al (2010); Chen and
Volpe (1998) and PISA (2012).
Research Findings
Findings: As far as level of financial literacy of millennials are concerned more than
60% of respondents correctly answered majority of questions but few cases namely time
value of money and corporate tax less than 30% answered correctly. Except share market,
regulatory framework and corporate tax, the level of financial literacy not varying statistically
according to area of studies. It is also found that maximum select indicators of financial
literacy are dependent on control variables except source of income, attended financial related
course and mentoring. By and large financial literacy is highest among accounting/finance
students followed by HR and marketing millennials. Reflections of financial literacy on
financial behaviour and attitude are found substantial as Pseudo R Square (Cox and Snell)
marked to .859 and .897 respectively.
Conclusion & Policy Implications:
Implications In a nutshell, it can be concluded that PG millennials are
having moderate financial literacy and lesser variations of literacy level among marketing,
accounting/finance and HR group. Parents level of education especially mother's education
has significant role in millennials financial literacy. Further, scale used for the study for
measuring financial literacy has significant influences on financial behaviour and attitude.
Key words
GENESIS AND DEVELOPMENT OF THE PROBLEM
Financial literacy and
knowledge, financial In terms of overall financial literacy, India is at the bottom among 16 countries in the
behaviour and attitude, Asia-pacific region with 59 index points, according to the annual MasterCard’s index
millennials, and for financial literacy (Kumar, 2013). Close to 76% Indian adults do not adequately
reflections understand key financial concepts, found a global survey conducted by Standard &
Poor’s Financial Services LLC. The S&P’s Ratings Services Global Financial Literacy
Survey found that this number is lower than the worldwide average of financial literacy,
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S.C. Das
but it is roughly in line with other BRICS (Brazil, Russia, achievement. A 2011 study found that three-quarters of
India, China and South Africa) and South Asian nations. Gen Y respondents felt confident about achieving their
According to the survey, three-quarters of Asian adults goals and 80 percent reported having high expectations
and two-thirds of adults worldwide are not financially for themselves (Bresiger, 2011). With such lofty and
literate (S&P survey, 2015). perhaps unrealistic expectations, Gen Y is also prone to
higher-than-average levels of disappointment. According
The Millennial Generation is hard to categorize and
to a 2010 study by the Pew Research Centre, Millennials
understand for multiple different variables and reasons.
are the most dissatisfied with their current earnings in the
Being born at any time in the period starting in the late
context of their ability to lead a desirable lifestyle (Taylor
1970s ending in the early 2000s creates the classification
and Keeter, 2010). This disappointment is not
of the individual being a “Millennial” (Bailey, 2014). Gen
unwarranted. In 2010, Gen-Y had an average level of
Y, generally described as those born from 1980 to 2000,
wealth that was 7 percent below the average level of wealth
have been the subject of intense scrutiny. This generation,
of those in their 20s and 30s in 1983 (Steuerle, McKernan,
variously called the millennial generation, the MeMeMe
Ratcliffe, and Zhang, 2013). Moreover, the study has
generation, digital natives, and the net generation, is one
followed maximum published studies based on the
of the largest population groupings the world has ever
financial literacy of university students across the globe.
seen. In the USA alone they number 80 million strong; in
The earliest published paper presented here is 2004
India, Africa, and most of South America and the Middle
(Jariah, Husniyah, Laily, & Britt, 2004) 2004), then 2009
East, more than 50% of the population is under 30. Even in
(Ibrahim, Harun, & Isa, 2009) and 2010 (Sabri,
China, 40% of the population is under 30 (Raina, 2014).
MacDonald, Hira, & Masud, 2010), and the latest is in
Gen Y is the youngest of generation cohort. They are
2013 (Shaari, Hasan, & Kumar, 2013). On the foregoing
categorized in different brackets by different people with
discussions and literature, the scholar has developed the
birth years ranging from 1977-1997. Also popularly known
following research questions and which to be addressed
as millennials, this cohort has many names that also
in the subsequent sections:
indicate their characteristics; Digital Generation, Net
Generation, Echo boomers, N-Gen (Bhotia and Agarwal, I. Is there any gender gap in the level of millennials
2014)
2014).. Gen Y comprising of those born between 1980 and financial literacy?
2000 would form close to 75% of the global workforce by
II. Whether financial literacy is dependent on
the year 2025 (Ganesh, 2014).
demographic background (control variables)?
The sheer size and unique demographics of Gen Y make
III. Are there any standard measures of predicting
its impact and involvement in financial matters more
financial literacy?
significant for the economy than that of any other birth
cohort. Hence it is important to explore this generation’s IV. What is the level of financial literacy if the university
expectations and social behaviours—which vary level commerce and business students in India?
significantly in some regards from previous generations—
V. How the individuals’ financial knowledge,
and the economic environment in which they operate.
behaviour and attitudes are related? and
Often referred to as the “instant gratification generation,”
Millennials have been characterized as having high VI. How financial knowledge reflects on financial
expectations for both professional and personal life behaviour and attitudes?
(Bishop, 2006). Its members desire purposeful work and
are passionate about issues like the environment. The SIGNIFICANCE OF THE STUDY
literature attributes the high levels of optimism, confidence, Today’s young adults, referred to as Millennials born
and achievement of Gen Y to a change in social values between the early 1980’s and 2000’s, are coming of age in
regarding children and family life. Specifically, Gen-Yers an economy unlike any other (Taylor et al., 2014). The
have grown up “in an era that placed a high value on macro-economic conditions of the Great Recession from
children,” with parents who gave priority to their approximately 2007 to 2011 systematically undermined
offspring’s personal development and self-esteem Millennials’ financial health by limiting employment
(Eubanks, 2006
2006). The confidence instilled in this generation opportunities, stagnating income growth, reducing net
has informed its attitudes toward professional worth, and increasing reliance on debt. Millennials entered
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Financial Literacy among Indian Millennial Generation and their Reflections on Financial Behaviour and Attitude....
a labour market with limited opportunities and saw higher Financial Literacy among High School Students”. In this
unemployment rates than the rest of the population (Rubin, study, Jump$tart defines financial literacy as “the ability
2014). Fewer Millennials entered the labour market than to use knowledge and skills to manage one’s financial
young adults from any preceding generation and their resources effectively for lifetime financial security
unemployment rate was roughly 15 to 17 percent at the (Hastings, et al. 2012). Atkinson and Messy (2012) has
height of the recession—5 to 7 percentage points higher defined financial literacy as “a combination of awareness,
than the average unemployment rate for the rest of the knowledge, skill, attitude and behaviour necessary to make
population. They also experienced diminishing returns sound financial decisions and ultimately achieve
for participating in the labour market, earning 6 percent individual well-being”. According to Vitt et al. (2000),
less per paycheck than in previous years (Mishel et al., financial literacy is the ability to read, analyze, manage,
2012). The average Millennial has about $1,000 in savings and communicate about the personal financial conditions
(Friedline et al 2014)
2014), suggesting that many may struggle that affect material well-being. It includes the ability to
to afford necessary expenses in the face of unemployment discern financial choices, discuss money and financial
and to become financially independent (Sironi, & issues without (or despite) discomfort, plan for the future,
Furstenberg, 2012). Millennials also delayed investing in and respond competently to life events that affect every
homes and those who did invest experienced substantial day financial decisions, including events in the general
wealth losses that were driven by declining home equity economy. Another study of Hogarth (2002) states that the
(Fry, 2012). These losses are reflected in the value of financially literate individuals are: i) knowledgeable,
Millennials’ accumulated net worth compared to that of educated, and informed on the issues of managing money
previous generations (Taylor et al 2011). Millennials’ net and assets, banking, investments, credit, insurance, and
worth is valued at $10,000, which is 41 percent less than taxes; ii) understand the basic concepts underlying the
the values of net worth held by Baby Boomers and management of money and assets; and iii) use that
Generation X’ers two decades ago (Bricker, 2014). knowledge and understanding to plan and implement
financial decisions.
Millennials are a high-impact generation poised to shape
the national and global economy in new and significant Research has shown that financial literacy is beneficial to
ways and their economic influence is expected to grow individuals and families (Blalock et al. 2004, Danes and
over the next decade. But the platform from which they Hira, 1987, Grable and Joo, 1998, Hibbert and Beutler,
will wield this influence is a troubling one. They engage 2001, Kerkmanneiet al ., 2000)2000). It increases students’
in expensive credit card behaviours, stand at the forefront chances for saving and investing, getting out of debt,
of the growth of student loan debt, and many are already spending less than they earn, and living on a budget. It
raiding their retirement accounts. Millennials’ financial also decreases their chances for bankruptcy, receiving
practices are of concern because of the potential for these government assistance (Bauer et al. 2000, Blalock et al.
behaviours to become firmly established. Indeed, the 2004, Huston et al. 2003)
2003), and making poor consumer
research has to be documented that the gap between the decisions (Grable and Joo 1998, Hayhoe et al. 2000) 2000).
amount of financial responsibility given to Gen’Yers and Students who lack financial knowledge have increased
their demonstrated ability to manage financial decisions financial difficulties that continue into later years (Danes
is rapidly widening. Furthermore, their knowledge deficit and Hira 1987, Hibbert and Beutler 2001, Hira 2002). The
could prove disastrous for them, the economy, and society. research of Chen and Volpe (1998) found that students
The research can help overcome the gap between the with less financial knowledge have more negative
amount of financial responsibility given to Millennials opinions about finances and make more incorrect financial
and their demonstrated ability to manage financial decisions. They pointed out that having a low level of
decisions. financial knowledge limits students’ ability to make
informed decisions. Lyons and Hunt (2003) found that
university students want to receive financial information
LITERATURE SURVEY
and have a preference about how financial education is
3.1 Empirical Evidence-International Context: Financial taught, who teaches it, and what the content is. The study
literacy as a construct was first championed by the of Boakye and Kansanba (2013) reveals that formal
Jump$tart Coalition for Personal Financial Literacy in its education is the major source of financial literacy of
inaugural 1997 study captioned “Jump$tart Survey of undergraduate students, followed by parents, the media,
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S.C. Das
and peers. The benchmark research of Lusardi (2012) on found that in Indian city people are still not much aware
the review of studies from US and some European countries about their finance related issues. Moreover, savings habit
also showed people lack numerical abilities which are among young people is not so high. Shetty & Thomas
relevant in every day financial decisions. (2014) concludes that the financial knowledge among
student in Mumbai is poor as compared to the global
Low levels of financial literacy have been linked to high
standards. A large part of this is due to poor numeracy
levels of personal and household debt (Lusardi & Tufano,
skills and can be attributed to the poor elementary and
2009); poor health (Joo & Garman, 1998)
1998); adverse health
primary education system as documented in other studies.
choices (Peters et al., 2007)
2007); and inadequate retirement
In a study of Bahadur (2015) concludes that financial
Lusardi & Mitchelli, 2007)
planning (Lusardi 2007). It has also been
literacy is the ultimate pillar of a strong financial system.
found that individuals with lower financial literacy levels
Financial literacy and financial education should be on
are more likely to have higher inflationary expectations
the agendas of educators, businesses, government
which further exacerbate the negative social and economic
agencies, policy makers, NGOs and the issues should be
consequences of poor financial literacy and lead to poorer
dealt with policy reforms at the national level. The study
general life outcomes (Bruine de bruinet al., 2010). Young
of Bhushan and Medury (2013) suggest that overall
people are very susceptible to the lifestyle aspirations of
financial literacy level of India is not very high. Financial
advertising and media and this is likely to increase reliance
literacy level gets affected by gender, education, income,
on debt (Fear & O’Brien, 2009). Survey of financial literacy
nature of employment and place of work whereas it does
literatures across the globe by Xu & Zia (2012), pointed
not get affected by age and geographic region. Empirical
out increasing relevance of financial literacy both in
evidence of Thorat (2007) argues that India has a large
developed and developing countries. They advance prior
population that does not have the rudimentary skills to
reviews by showing financial literacy in developing
make basic financial decisions. It has been estimated that
countries was low. They also underscore lack studies in
only about five percent of Indian villages have a commercial
developing countries albeit the same is highly needed for
bank branch. Similarly, over 40 percent of the adult
policy making and academic purpose. Their result,
population have no banking account; a number which
confirmed Lusardi & Mitchel (2011) & Lusardi (2012) with
grows to over 60 percent in rural areas. Ambarkhane et al
respect to the correlation between financial literacy and
(2015) in their study concludes that considering the
socio demographic factors. Similar to Lusardi & Mitchel
education system in India, financial literacy here must be
(2011), differences across ethnic groups, and employment
at low level. Moreover, India has a large unbanked
status also observed at global level. In their review of
population; financial literacy will help in bringing them
Lusardi & Mitchelle (2013)
(2013), ‘Economic Importance of
in formal financial fold. It will favourably affect not only
Financial Literacy’, affirmed that existing literature show
economic aspects of individuals but also social aspects.
financial literacy increases with age, but decline at old
Aggarwal and Gupta (2014) of their findings revealed that
age. And also females at all age recorded lower financial
the level of education and discipline (commerce, non
literacy than male.
commerce) influence financial literacy among youths. Also,
3.2 Empirical Review- Indian Context: Agarwalla et al males were found to have higher levels of financial
(2012) in their study found that “Financial knowledge awareness compared to females. Murithi, et al (2012) in
among Indians is very low than the international their study of investors’ behaviour in India found investors
standards. But the financial behaviour/attitude of the in India are aware of the risk and return trade off, an aspect
employees and retired seems to be positive. The financial of financial literacy relevant to investors, and most of them
knowledge among the women are marginally high than have higher educational qualification, but still their
the men. Greater access to consumption credits has investment portfolio is not diversified. Shankari, et al
influenced the financial behaviour of young employees”. (2014) studied financial literacy basic banking product
In a study of Singh (2014) concludes that greater financial awareness advanced banking knowledge, and financial
literacy can also be an important component to efforts to behaviour using a sample survey of 500 respondents in
increase saving rates and lending to the poorest and most Tamil Naidu, India found an overall low financial literacy
vulnerable consumers.. Lower Financial literacy is linked in the sample. Contrary to existing literatures no significant
to lower household savings, as well as higher reported relationship between level of financial literacy and
over-indebtedness. The study of Sekar and Gowri (2015) demographic variables such as “ Age, Gender and
( 19 )
Educational Qualification of the respondent ” were Based on objectives and literature the study is indented to
evidenced. The study of Bhushan and Mudery (2013) test the following hypotheses:
concludes, based on a questionnaire survey of 516 sample
H01: Marketing, HR and Accounting/Finance
salaried employees in Himachal Pradesh, India analyzed
millennials has the symmetrical level of financial
using descriptive statistics and ANOVA, low level of
literacy;
financial literacy (overall mean = 58.3%), and found
statistically different level of financial literacy across H02: Financial literacy does not have dependency on
gender, education status, and income, nature of select twelve control variables (demographic
employment, and place of work. indicators);
3.3 Research Gap Exploration: Aiming to profoundly H03: Reflections of financial literacy on financial
review of extensive researches, this study deduces various behaviour are very negligible; and
insights into financial literacy. It seems that financial
H04: Influences of financial literacy on financial attitudes
illiteracy as a prevailing issue around the world ranges
are not substantial.
from general groups to millennials, from people in
developed countries to those in developing ones. The
gender gap in financial literacy is of particular concern as
women are also more likely than men to become PROPOSED RESEARCH MODEL & DESIGN
economically vulnerable due to longer life spans, shorter Explanatory studies look for explanations of the nature of
work experiences, and other factors. Although there are certain relationships. Hypothesis testing provides an
plenty of studies concerned with measuring millennials understanding of the relationships that exist between
financial literacy but they have used specified measures variables. The goal of explanatory research is to answer
such as the Jump$tart Coalition Survey, the Washington the question of why. Explanatory research attempts to go
Financial Literacy Survey, and the Survey of Consumer above and beyond what exploratory and descriptive
Finances do not collect sufficiently detailed information research to identify the actual reasons a phenomenon
on individuals’ financial education and variables related occurs. This paper explores level of financial literacy among
to financial decision making. One reason for this is the Gen Y (millennials) and their dependency on select control
lack of a standard financial literacy measure (Huston, variables. It further seeks to establish the influences of
2010). Hung, Parker, & Yoong (2009) in their studies also financial literacy on financial behaviour and attitudes.
pointed out that surveys that have been designed to This study adopted an explanatory research design as the
measure financial literacy across the globe are not framework to examine the relationship between variables
comprehensive. In order to be effective, financial literacy while determining cause and effect (Figure-1). The study
education, therefore, should be tailored to suit different has strong literature base and methodology in eastern and
demographics, life stages, and learning styles (Huston, western cultural context as Chen and Volpe (1998); Jones
2010). The present study uses the mix measures of financial (2005); Mandell (2008); Robb and Sharpe (2009); Cude et
literacy including comprehensive spectrum of al (2006); Lusardi et al. (2010); OECD (2012); Banco de
demographic importance with western and eastern Portugal (2010).
millennials expectation orientated construct.
Control Variables Outcome Variables
Gender; Level of Financial Literacy Financial Behaviour

Background of Economical
Financial numeracy; orientation
study;
OBJECTIVES AND HYPOTHESES DEVELOPMENT Age; Inflation; Record management
Surplus money
Time value of money;
Dependent; Deficit money
Price Index; Extra money
Area of studies;
I. To measure the level of financial literacy of Sources of income;
Net worth; Financial intelligence
Share market; Financial
millennials according to their area of studies; PCI; Regulatory Attitudes
Academic framework; Financial control
performance; Insurance; Financial goals
II. To explain the dependency of financial knowledge Financial education; Corporate tax; Anxiety in finance
Father’s education; Credit intelligence; Uncertainty
on select control variables; and Mother’s education; Lender; Safe and risk
Financial future
Financial Risk diversification;
and Afraid
communication. Importance to Saving
III. To find out the reflections/influences of financial Bond prices.
Life Insurance
knowledge on financial behaviour and attitudes.

Figure: 1- Proposed Research Model
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S.C. Das
6.1: Sampling Technique and Adequacy Table-1 Targeted Respondents
Since the study mainly focused on millennial generation, Gender HR Accounting/Finance Marketing Total
(Major) (Major) (Major)
PG students of commerce and management have been Boys 35 35 35 105
targeted. Stratified random sampling was used to Girls 35 35 35 105
determine the respondents of HR, marketing and Total 70 70 70 210
accounting/finance from the university system. A total For the convenience of equal distribution, the study
210 PG students of millennial generation in equal considered sample size of 210 PG students of commerce
proportion of three different streams (Marketing, and management representing 19% of the total population.
Accounting/finance and HR) have been selected. Gender The sample size was considered to enable the researchers
diversity also been considered at the time of selecting the collect more detailed information on the subject.
respondents. The notion behind selection of commerce and
management students is that whether they have sound 6.2 Research Instrument
financial skills or not. There is a relationship between
Lusardi and Mitchell (2011) financial literacy levels of
financial courses taken in college and students’ knowledge
adults around the world have been measured based on
of investment (Peng, Bartholomae, Fox, & Cravener, 2007).
three basic concepts, i.e. understanding and calculation
According to Beal and Delpachitra (2003), Chen & Volpe
of interest rates, understanding of inflation, and risk
(1998), Volpe, Chen, & Pavlicko (1996), Peng et al. (2007),
diversification knowledge. Heenkkenda (2014) has used:
and Robb & Sharpe (2009) have indicated that business
(i) Saving Behaviour, (ii) Investment and payment
majors are having more knowledge about personal finance
mechanisms, (iii) Awareness on financial products, (iv)
than non-business majors.
Risk Management & pension funds, and (v) Money
Sampling size and adequacy have been decided from the Management Financial planning Knowledge in measuring
following formula adopted from deVaus (2002(2002), at 95% financial literacy in Sri Lanka. The report of the Financial
confidence level, 5% margin of error and estimated Literacy and Education Commission (2006) mentions that,
heterogeneity of the population to be 20%. “a systematic method of evaluation of financial literacy
programs does not exist.” Huston (2010) also has identified
n = p% * q% * [z/e%]2 three major difficulties in developing a standard measure
Where n is the minimum sample size required i.e., Lack of common construct; Lack of comprehensive set
of questions covering all components of financial literacy;
p% is the proportion belonging to the special category and Lack of guidance for interpretation of the measure.
q% is the proportion not belonging to the special category The survey followed the standard measures comprising
z is the z value belonging to the level of the confidence 50 questions/statements and is divided into four sections.
level required, and e% is the margin of error. The first section contains 12 questions related to
demographics of the participant and is based on prior
Thus n = 0.20*0.80*[1.96/0.05]2 Chen and Volpe 1998; Lusardi et al 2010);
literature as age (Chen
n = 245 background of studies (OECD, OECD, 2006; Guiso and
Jappelli,2008; Chen and Volpe,1998); area of studies
Based on the minimum sample size of 245, the adjusted (Chen and Volpe:1998; Robb and Sharpe, 2009); academic
sample size can be obtained as performance (Cude et al ,2006); per capita income (Lusardi
et al,2010; Guiso and Jappelli, 2008; OECD 2006; Chen
n‘ = n/{1+(n/N)}
and Volpe,1998); extracurricular course (Robb and
Where; n‘ is the adjusted sample size, n is the minimum Sharpe ,2009; Mandell and Klein,2009); discussions with
sample size and N is the total population. parents (Cude et al ,2006; Lusardi et al 2010)
2010). The second
part of instrument is financial behaviour comprising 14
n‘ = 245/1+[245/1,100] = 200
statements adapted from Banco de Portugal (2010). The
study used Chen and Volpe (1998) 11 measures of financial
attitude. The fourth section used 13 mixed measures of
financial knowledge and few have been adapted from
( 21 )
Jumpstart Survey (2008); Lusardi et al (2010

(2010); Chen STATISTICAL ANALYSIS AND DISCUSSIONS
and Volpe (1998) and PISA (2012).
7.1 Objective-I: To measure the level of financial literacy
6.3 Testing the Goodness of Measure for the Financial of millennials according to their area of studies; and H01:
Literacy Construct Marketing, HR and Accounting/Finance group of
millennials has the symmetrical level of financial literacy.
6.3.1 Content Validity: It refers to the extent to which an
instrument covers the meanings included in the concept Table: 2 Strongest and Weakest Areas of Financial
(Babbie, 1992). In a similar vein, Rubio, Berg-Weger, Literacy
Tebb, Lee, and Rauch (2003) refer to content validity as to Variable Questions/Right % % Do not
the extent to which the items on a measure assess the same answer Correct Incorrect Know
1. Financial FK_1: Mo re than 79.5 15.3 5.2
content or how well the content material was sampled in Numeracy Rs.1020
the measure. Essentially, the goals of content validity are 2. Inflatio n FK_2: Less than 75.2 14.7 10.0
to day
to clarify the domain of a concept and judge whether the 3. Time value o f FK_3: His Sibling 15.7 70 14.3
m o ney
measure adequately represents the domain (Bollen, 1989). 4. Price Index FK_4: The same 62.4 34.3 3.3
Content validation results in a theoretical definition that 5. Net wo rth FK_5: The 56.7 37.6 5.7
d ifference betw een
explains the meaning of the variable in question (Bollen, o utsid ers
Liabilities and
1989) and is guaranteed by the literature overview (Gomez, Asse ts
Lorente & Cabrera, 2004). 6. Share mark et FK_6: Prim ary 52.9 47.2 --
mark e t
7. Regulato ry FK_7: RBI 89.5 10.5 --
6.3.2 Convergent Validity: According to Campbell and frame wo rk
Fiske (1959), convergent validity refers to all items 8. Insurance FK_8: Pro tect yo u 55.7 44.3 --
fro m sustaining a
measuring a construct actually loading on a single se vere lo ss
9. Co rpo rate Tax FK_9: 30-35% 28.6 71.7 --
construct. Convergent validity is established when items
10. Cred it FK_10: Interest rate 74.8 25.3 --
all fall into one factor as theorized. Convergent validity intelligence and o ther co sts
11. Lende r FK_11: Bill p aying 71.4 28.6 --
was carried out through a within factor, factor analysis in re co rd and inco me
order to obtain a more in-depth judgment of the 12. Risk FK_12: False 60 18.1 21.9
d iversificatio n
dimensionality of the construct under study (Hair et al, 13. Bo nd p rice s FK_13: The y will 49.5 32.4 18.1
rise
2006). All the three factors displayed uni-dimensionality
with financial behaviour, KMO was 0.693 explaining 57 The Table-2 shows the groups of questions correspondent
percent of the variation; financial attitude, KMO was 0.607 to each financial knowledge, as well as the percentage of
explaining 54 percent of the variation; and financial correct, incorrect and “do not know” answers to each one.
knowledge, KMO was 0.62 explaining 52 percent of the The question with the worst results is the one about the
variation. Thus, the analysis provided evidence of time value of money (FK_3). Only 15.7% of the respondents
convergent validity. answered correctly to this question, 70% gave a wrong
6.4-Analytic Strategy: As per the needs of the study, answer and 14.3 % do not know or did not answer. The
analytic segment have been categorised into three parts. question (FK_9), about corporate tax rate, has also one of
Initially the worst results, with only 28.6% of correct answers. The
Initially, Mann-Whitney (U) test has been used to measure
level of financial literacy in the three different areas of question with the best result is about the topic “Regulatory
business studies. Secondly
Secondly, for measuring the dependency system of banks and financial institutions”, composed by
of level of financial knowledge on eleven specified control the question FK_7, with 89.5% of correct answers, 10.5%
of incorrectly answered. Another with high result is about
variables and keeping in mind of underlying assumptions,
Mann–Whitney (U) tes testt and Kruskal–Wallis (H)
H) test have financial numeracy. This is composed by the question
been used. Finally, Ordinal Regression Analysis (PLUM) FK_1, with 79.5% of correct answers, and the questions of
ultinomial Logistic Regression (MLR) model have
and Multinomial FK_2, and FK_10, with 79.5%, and 74.8% of correct
answers, respectively.
been used to measure the influences of multiple
independent variables of financial knowledge on financial
behaviour and attitudes.
( 22 )
S.C. Das
Table:3 Tests of Normality
Variables Kolmogorov-Smirnova Shapiro-Wilk

Statistic df Sig. Statistic df Sig.
Financial num eracy .474 210 .000 .516 210 .000
Inflatio n .423 210 .000 .657 210 .000
Tim e value o f m oney .348 210 .000 .719 210 .000
Price Ind ex .349 210 .000 .789 210 .000
Net Worth .312 210 .000 .808 210 .000
Share m ark et .283 210 .000 .830 210 .000
Regulato ry Fram ew ork .524 210 .000 .358 210 .000
Insurance .336 210 .000 .808 210 .000
Corpo rate tax .238 210 .000 .853 210 .000
Cred it intelligence .452 210 .000 .591 210 .000
Lend er .445 210 .000 .597 210 .000
Risk d iversification .305 210 .000 .783 210 .000
Bo nd Prices .305 210 .000 .768 210 .000
a. Lilliefo rs Significance Co rrection
Normality Test: According to Marôco (2010)

(2010), the Kolmogorov-Smirnov test is used to determine if the distribution of a
given variable comes from a population with a specific distribution. Accordingly, the scholar has conducted the
normality test of Kolmogorov-Smirnov, which results are presented in the table-3. Given the p-value <0, 05, so one can
reject the null hypothesis of normality in all thirteen cases. So, it may be concluded that the financial knowledge of
millennial does not follow a normal distribution.
Table 4 : Area Wise Measurement of Level of Financial Literacy

RANKS STATISTICAL SIGNIFICANCE
Variables Area of Studies N Mean Rank Test Statistics Test Results
Financial Numeracy Marketing 70 105.84 Chi-Square 2.713
Accounting/Finance 70 111.28 df 2
HR 70 99.38 Asymp. Sig. .258
Total 210
Inflation Marketing 70 104.04 Chi-Square 3.156
HR 70 113.01 Asymp.Sig. .206
Total 210
Time value of money Marketing 70 107.76 Chi-Square 2.588
HR 70 111.49 Asymp.Sig. .274
Total 210
Price Index Marketing 70 103.59 Chi-Square .328
HR 70 104.54 Asymp.Sig. .849
Total 210
Net Worth Marketing 70 97.14 Chi-Square 2.479
HR 70 109.69 Asymp.Sig. .280
Total 210
Share market Marketing 70 119.86 Chi-Square 13.561
HR 70 110.16 Asymp.Sig. .001
Total 210
( 23 )
Regulatory Framework Marketing 70 96.97 Chi-Square 7.979

HR 70 111.96 Asymp.Sig. .019
Total 210
Insurance Marketing 70 100.82 Chi-Square .861
HR 70 106.38 Asymp.Sig. .650
Total 210
Corporate tax Marketing 70 89.96 Chi-Square 9.782
HR 70 105.84 Asymp.Sig. .008
Total 210
Credit intelligence Marketing 70 101.70 Chi-Square .721
HR 70 106.99 Asymp.Sig. .697
Total 210
Lender Marketing 70 102.46 Chi-Square 1.695
HR 70 111.59 Asymp. Sig. .428
Total 210
Risk diversification Marketing 70 108.44 Chi-Square .331
HR 70 103.59 Asymp. Sig. .848
Total 210
Bond Prices Marketing 70 96.91 Chi-Square 2.848
HR 70 106.72 Asymp.Sig. .242
Total 210
The Table-4 represents the measurement of financial highest score, followed by HR group whereas, marketing
literacy based on area wise namely marketing, accounting/ group scored the least mean rank. The study is similar to
finance and HR. It is clearly evident that knowledge of the study of Boakye and Kansanba (2013) whereas
share market, regulatory framework and corporate tax are financial literacy is highest among finance/accounting
the three different indicators of financial literacy vary students followed by banking and finance, marketing, and
among millennials. In case of literacy about share market, human resource management students. The present study
significance level was less than the alpha value of .05. So can also be verified with Chen & Volpe, (1998); and Volpe
this result suggests that there is a difference in financial et al., (1996) concludes that non-accounting majors are
literacy regarding share market across the different group more likely to be less knowledgeable about personal
of studies. Mean rank for the three groups presented (Table: financial than business majors particularly in finance and
4) that marketing group had the highest overall ranking accounting. In their study of Shaari at al (2013) also found
followed by HR group but Accounting/Finance group that there is a significant relationship between financial
scored the least. Secondly, the literacy on regulatory literacy level and the respondents’ Accounting/Finance
authority is concerned (X2=7.979; P=.001<.05) has the Major and Non-Accounting Major. This results is
significant difference among the millennials. The same supported by Beal & Delpachitra (2003) , Chen & Volpe
can be verified with the table: 4, whereas HR millennials (1998), Peng et al. (2007), Robb & Sharpe (2009) and Volpe
scored the highest followed by Accounting/Finance but et al. (1996), which mentions student’s major courses
marketing group scored the least. In case of corporate tax, studies in university are significant impact to personal
financial literacy is varied according to the area of studies financial literacy, and have indicated that accounting
at 5% level of significance. As far as mean rank is majors are more knowledge about personal finance than
concerned, millennials of Accounting/Finance had the non-accounting majors.
( 24 )
S.C. Das
Table: 5 Influences of Select Control Variables on Financial Knowledge
Code Grouping Test Non-Parametric Descriptive Statistics Test Statistics

Variable Variables Test
RP*_1 Gend er Net w o rth Mann-Whitney U Fem ale:105 115.50 Z=-2.66 P<.05
Male: 105 95.50
RP_2 Stud y Price Ind ex Krusk al Wallis H Arts: 03 61.67 X2=6.2 P<.05
Back gro und Test Co m m erce:180 103.29
Science:27 125.07
20-22 108.83
Price Ind ex Krusk al Wallis H 23-24 93.88 X2=5.31 P<.05
RP_3 Age Test 25-26 129.11
20-22 100.11
Bo nd Prices Krusk al Wallis H 23-24 119.60 X2=5.12 P<.05
Test 25-26 98.06
RP_6 Acad em ic Share Krusk al Wallis H 5.0-6.5 135.75
Perform ance Market Test 6.5-8.5 102.53 X2=5.53 P<.05
> 8.5 113.94
Up to Rs.5000 99.93
Rs. 5000-10000 95.95
RP_7 Per capita Financial Krusk al Wallis H Rs. 10000-15000 104.47 X2=19.5 P<.05
Incom e Num eracy Test >Rs. 15000 102.68
Do not k now 139.31
Mid dle scho ol 122.85
Tim e value Krusk al Wallis H High schoo l 113.83
o f m oney Test Interm ed iate 107.78 X2=8.10 P<.05
Bachelo r 91.57
RP_11 Father’s Masters 109.86
ed ucation Net Wo rth Krusk al Wallis H Mid dle scho ol 91.27
Test High schoo l 78.48
Interm ed iate 94.22 X2=13.8 P<.05
Bachelo r 119.18
Masters 112.39
Mid dle scho ol 106
High schoo l 103
Inflation Krusk al Wallis H Interm ed iate 104 X2=8.58 P<.05
Test Bachelo r 95
Masters 127
RP_12 Mother’s Mid dle scho ol 101
Ed ucatio n High schoo l 79
Net w o rth Krusk al Wallis H Interm ed iate 120 X2=14.6 P<.05
Test Bachelo r 117
Masters 106
Mid dle scho ol 110
High schoo l 92
Corp orate Krusk al Wallis H Interm ed iate 106 X2=9.88 P<.05
tax Test Bachelo r 124
Masters 86
Mid dle scho ol 91
Cred it Krusk al Wallis H High schoo l 120 X2=15.9 P<.05
Intelligence Test Interm ed iate 108
Bachelo r 118
Masters 90
RP* denotes respondents profile
( 25 )
7.2: Objective-II: To explain the dependency of financial variation with the academic indicators of the respondents.
knowledge on control variables; and H02: Financial literacy Again symptoms of financial numeracy are highly
does not have dependency on select eleven control dependent on the per capita income of the respondents.
variables (demographic indicators). Further, among the financial literacy variables; time value
of money and net worth are highly dependent on the
Since all of data related with test variables (financial
father’s education of respondents. In the table: 5, net worth,
knowledge), falls asymmetrical distribution, the scholar
credit intelligence and corporate tax are highly dependent
used the two different non-parametric test namely Mann-
on mother’s education and rest are showing moderate to
Whitney (U) and Kruskal Wallis (H) test for the analyses
low dependency.
purpose. The study used eleven different demographic
features (control variables) of respondents, , namely gender, 7.3 Objective III: To find out the reflections/influences of
study background, age, individual responsibility, financial knowledge on financial behaviour and attitudes;
academic performance, per capita income, source of H03: Reflections of financial literacy on financial behaviour
income, attended financial course, father’s education, are very negligible; and H04: Influences of financial literacy
mother’s education and preliminary financial knowledge on financial attitudes are not substantial.
etc., for understanding their impact on financial literacy.
This section having two different parts of empiricism,
Table-5 reveals that the financial knowledge of net worth
firstly keeping in view the nature of data, ordinal
varies with the gender of the respondents, whereas rest of
regression analysis (PLUM) have been performed to
ten components of financial literacy does not have
measure the influences of financial literacy on financial
influences. Female scored the highest in terms of mean
behaviour. Secondly, Multinomial Logistic Regression
rank which is contrary to the study of OSeifuah & Gyekye
(MLR) model was used for understanding the impact of
(2014) showed that being male, financing college using
financial literacy on financial attitude.
bank loan, participation in family financial management
decision and exposure to money management course 7.3.1: Reflections of Financial Literacy on Financial
showed significant on financial literacy. Knowledge about Behaviour: The model fitting information gives the
price index highly varies with the study background i.e., likelihood difference between base line and the final model
arts, commerce and science, whereas science background (Table-6). The significant Chi-Square statistic (P<.05)
student has higher level of financial literacy. This finding indicates that the final model gives a significant
is consonance with the study of Aggarwal and Gupta, improvement over the intercept only model. Hence, the
(2014) reveals that the level of education and discipline null hypothesis (H0) that there is no significant impact of
(commerce, non commerce) influence financial literacy independent variables of financial literacy on financial
among youths but contrast with previous studies by Chen behaviour is rejected at .1% level of significance (P<0.001).
and Volpe (2005) that business students have higher
Table:6 Model Fitting Information
personal financial knowledge compared to non business
students (Worthington, 2006; Borden et al 2006). The -2 Log
Model Likelihood Chi-Square df Sig.
Kruskal Wallis (H) test shows commerce background
Inte rce pt Only 1309.149 --- --- ---
millennials has the highest level of competence on
Final 897.827 411.321 36 .000
understanding price index in comparison to arts and
Link function: Complementary Log-log.
science background. Price index and bond prices also show
high dependency on age of the respondents, whereas other Table:7 Goodness-of-Fit
financial literacy variables are showing moderate to low Chi-Square df Sig.
level of dependency. Age group of 25-26 has the highest Pearson 5543.186 5978 1.000
scores of financial literacy, whereas 23-24 age group scores Deviance 1233.631 5978 1.000
the least. The result is same as Chen & Volpe (1998), Link function: Complementary Log- log.
Micomonaco (2003), and Volpe et al. (1996) who found
The Pearson and Deviance goodness-of-fit (table-7)
out lack of financial literacy between those aged 18-24
measures reveal the fact that the model adequately fits the
and this is not only a result of insufficient financial-based
data, the significance value being greater than 0.05. So it
education at the school level. Knowledge of share market
can be concluded that the data are consistent with the
operation is highly dependent on academic performance
model assumptions. Therefore, the assumption of good fit
(CGPA) but all other variables shows insignificant or lower
is accepted.
( 26 )
S.C. Das
Table 8. Pseudo R-Square Increased financial knowledge is also found to influence

students’ attitudes positively towards business in general
Effect Size Strength and their ability to be wise consumers in society (Langrehr
Cox and Snell .859
1979).
Nagelk erke .860
McFad d en .308 Table: 10- Model Fitting Information
Table 9. Test of Parallel Lines b Model Fitting Criteria Likelihood Ratio Tests
-2 Log -2 Log Chi-
Model Likelihood Chi-Square df Sig. AIC BIC Likelihood Square df Sig.
Null Intercept
897.827 1.215E3 1.288E3 1.171E3
Hypo the sis Only
Ge ne ral .000 897.827 1080 1.000
b. Link functio n: Co mple me ntary Lo g-lo g. Final 2.409E3 5.280E3 692.679 478.041 836 .03
The table: 10 reveals that initial Log likelihood value

Further, to assess the impact of financial literacy on
obtained for the model with no independent variables is
financial behaviour the Pseudo R-Square (effect size) is
1.171E3. The final log likely hood model value acquired
used (table: 8). In this case, Cox and Snell, Nagelkerke and
for the model considering all independent variables is
McFadden R-square value provide an induction of the
692.679 and the chi-square value is 478.041. The significant
amount of variation in the dependent variable. Here the
chi-square statistic indicates that the final model gives a
Pseudo R2 value of Nagelkerke=.860 suggesting that 86%
significant improvement over the baseline intercept-only
of the variability in financial behaviour is explained by
model.
the thirteen financial literacy variables used in this model.
Further, null hypothesis states (table: 9) that the slope The Pearson and Deviance goodness-of-fit measures
coefficients in the model are the same across the response (Table-11) reveal the fact that the model adequately fits the
categories. The significance P=1.000>0.05 indicated that data, as the significance value (.08) being greater than 0.05.
there was no significant difference for the corresponding This suggested that the existence of relationship between
slope coefficients across the response categories, the dependent variables and the dependent variables are
suggesting that the model assumption of parallel lines is supported.
not violated. The inference is consistent with Cole et al
(2014) on their experimental study of financial education Table: 11 Goodness-of-Fit
and its effects on financial behaviour and outcome in South Chi-Square df Sig.
Pearso n 83336.580 3432 .09
Africa, found that financial knowledge has a positive effect
Deviance 675.319 3432 1.000
on improving saving behaviour, low interest for loan
application. Previous research has also found that financial Table: 12 Pseudo R-Square
literacy can have important implications for financial Cox and Snell .897
behaviour. People with low financial literacy are more Nagelk erk e .900
McFad d en .400
likely to have problems with debt (Lusardi and Tufano
2009), less likely to participate in the stock market (Van To assess the impact of financial knowledge on
Rooij et al. 2007), less likely to choose mutual funds with individual’s financial attitude the Pseudo R-square is used
Hastings and Tejeda-Ashton 2008), less likely
lower fees (Hastings in table-12. A good R2 is totally depends of the quality and
to accumulate wealth and manage wealth effectively outcome of the explanatory variable. The same table, shows
(Hilgert et al 2003, Stango and Zinman 2007) and less the Pseudo R2 values (Cox and Snell R2=.897) indicates
likely to plan for retirement (Lusardi and Mitchell, 2007). that 90% of variance in financial attitude is explained by
the financial literacy variables.
7.3.2: Reflections of financial literacy on Financial
Attitude: In the study of Danes (1994) mentions that a
higher level of financial literacy influences financial
knowledge, attitudes, and behaviours. Financial education
increases financial knowledge and affects financial
attitudes (DeVaney et al. 1996, Grable and Joo 1998).
( 27 )
Table-13 Likelihood Ratio Tests
Model Fitting Criteria Likelihood Ratio Tests

BIC of -2 Log
AIC of Reduced Reduced Likelihood of
Variables Model Model Reduced Model Chi-Square df Sig.
Intercept 2.409E3 5.280E3 6.927E2a .000 0 .
FK_1 2.605E3 5.256E3 1.021E3b 328.699 66 .000
FK_2 2.344E3 4.994E3 7.595E2b 66.842 66 .448
FK_3 2.337E3 4.988E3 7.531E2b 60.374 66 .672
FK_4 2.396E3 5.047E3 8.123E2b 119.670 66 .000
FK_5 2.405E3 5.056E3 8.214E2b 128.748 66 .000
FK_6 2.313E3 4.964E3 7.293E2b 36.590 66 .999
FK_7 1.876E3 4.527E3 2.917E2b . 66 .
FK_8 2.419E3 5.070E3 8.348E2b 142.161 66 .000
FK_9 2.346E3 4.997E3 7.622E2b 69.480 66 .361
FK_10 2.296E3 4.947E3 7.118E2b 19.149 66 1.000
FK_11 1.990E3 4.641E3 4.057E2b . 66 .
FK_12 2.362E3 5.087E3 7.340E2b 41.344 44 .586
FK_13 2.361E3 5.012E3 7.767E2b 83.996 66 .047
The chi-square statistic is the d ifference in -2 log-likeliho od s betw een the final m od el and a red uced m o d el. The
red uced m o d el is form ed by om itting an effect from the final m o d el. The null hyp othesis is that all param eters of
that effect are 0.
a. This red uced m od el is equivalent to the final m o d el because o m itting the effect d o es not increase the d egrees
o f freed o m .
b. Unexp ected singularities in the Hessian m atrix are encountered . This ind icates that either so m e p red icto r
variables should be exclud ed or so m e categories should be m erged .
The likelihood ratio test (table: 13) evaluates the overall CONCLUSIONS AND POLICY IMPLICATIONS
relationship between independent variables and
dependent variable. In case of financial attitude, there is Financial literacy has been measured with thirteen odd
significant relationship between the independent financial questions of business, based on most cited literatures. It is
literacy variables and dependent variables of financial found that more than 70% of students answered correctly
attitudes namely financial numeracy (.000), price index the questions related with financial literacy, inflation,
(.000), net worth (.000), insurance (.000) and risk regulatory framework, credit intelligence and lender.
diversification (.047) at 5% level of significance. Thus only Whereas, 50-60% of students answered correctly the
five variables of financial literacy have the significant questions of price index, net worth, share market,
relationship with financial literacy and rest are found insurance and risk diversification. The worst condition in
insignificant relationship. The finding is same of Ibrahim, case of time value of money and corporate tax whereas
Harun, and Isa (2009) whereas correlation was found only less than 30% of respondents answered correctly.
between financial literacy and financial attitude. Those Statistical measurement of Kruskal-Wallis (H) test reveals
who had higher level financial attitude have higher level only three different cases namely share market, regulatory
of financial literacy.. The similar observation made by framework, and corporate tax is highly dependent on area
Agarwalla et al (2013), Jorgensen (2007) that financial wise (marketing, accounting/finance, and HR group)
knowledge, attitudes and behaviours are also positively millennials but all other variables shows insignificant or
correlated, thus, students with better financial knowledge lower variations. It can be concluded that PG group of
tend to adopt more appropriate financial attitudes and millennials are having moderate financial literacy and
behaviours. lesser variations of literacy level among marketing,
accounting/finance and HR group.
( 28 )
S.C. Das
Data reveals through Kruskal-Wallis (H) test indicates attitudes over time (Bubolz and Sontag 1993). For
that few indicators of financial literacy are dependent on behavioural change to take place and be significant,
seven control variables namely gender, study background, knowledge and attitudes must change (Hayhoe et al. 2005,
age, academic performance, per capita income, father’s Miller and C’de Baca 2001). The study recommends the
and mother’s education, whereas source of income, need for undergraduate students to be involved in financial
attended financial course and mentoring does not have literacy programs at any point during their studies in the
any influences on financial literacy. The study found that line of developed nations. The rising need for financial
knowledge about time value of money, net worth, inflation literacy programs is also prominent in developed countries
and corporate tax are highly dependent on parent’s such as US (Boyland & Warren, 2013), UK (Adult financial
education, whereas other variables of financial literacy literacy advisory group (AdFLAG), 2000
2000), Australia (Fry,
are showing moderate to lower level of dependency. Mihajilo, Russell, & Brooks, 2006), and New Zealand and
Japan (Cameron, Calderwood, Cox, Lim, & Yamaoka,
In order to know the reflections of financial literacy on
2013).
financial behaviour, ordinal regression has been applied
using PLUM (Polytomous Universal Model Model)). The PLUM
analysis reveals that it creates a significant difference on
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Dr. S.C. Das

Professor of OB and HR
Faculty of Commerce, BHU, Varanasi
UP, India
E-mail : [email protected]
( 34 )
An Empirical Study of Corporate Environmental

Accounting and Reporting of Different Groups of
Selected Companies in India
C. K. Sonara, Dhaval Sharma and Ashav Patel
ABSTRACT
The field of environmental accounting has made great tides in the past two decades, moving
from a rather arcane endeavor to one tested in dozens of countries and well established in a
few. The industrial activities are directly or indirectly responsible for various environmental
problems. Such as soil erosion, land degradation, over exploitation of natural resources,
pollution of water, air, noise, light, marine etc.
Financial reporting is a social activity. The present form of accounting reports and the standards
used to prepare them reflect our business values. Environmental awareness within the
management community is reflected in frequent coverage of sustainability and environmental
responsibility in management oriented publications. These social developments create a
need for financial information. If the trend towards increased corporate responsibility for
environmental impacts continues then accounting practice will ultimately reflect this.
The present study has been undertaken to find out the performance regarding Environmental
Reporting Practices in corporate sector as specially engaged in production areas and chemical
sector in India. This paper has been containing following aspects:
Concepts
Review of Literature
Research methodology
Environmental Accounting And Reporting Practices In India
New Concepts in Environmental Accounting
Findings and Suggestions & Conclusion
This paper consists of 50 industrial units (in five groups) covering conceptual as well as
practical aspects on corporate Environmental Reporting. This paper can be useful to various
industrial units and segments of society viz. to researchers, teachers, and executives of the
companies, law makers and Government, accounting practitioners, management, consultants,
financial managers and students preparing for professional and comparative examinations.
INTRODUCTION
Private sector and public sector organizations, including private listed companies,
government departments, statutory authorities and government business enterprises
are under increasing pressure to disclose information about the organization’s
interaction with the natural and physical environment. In some instances, changes
Key words
have been demanded by parliamentary committees which signal increasing scrutiny of
Environment, Land environmental disclosures in annual reports.
Degradation, Corporate
These contributions are limited and non - renewable. The main objective of
Social Responsibility,
TQM, Carbon Credit and environmental accounting is to encourage sustainable economic development by
Global warming improving the knowledge and understanding of the increasing interactions between
the environmental and the economy. The environmental accounting makes three vital
conditions to the economy.
( 35 )
An Empirical Study Of Corporate Environmental Accounting And Reporting Of Different Groups Of Selected Companies In India
1) Source of energy and material. • Meeting with the global standards imposed by WTO
2) Sink for dissipated energy and pollution and GAAP.
3) Living space for living being
• Framing for environmental policies and strategies.
ENVIRONMENTAL ACCOUNTING
There is no standard definition of natural resources and
Environmental accounting has been accepted as an environmental accounting. The term environmental
umbrella term with the various meaning and uses. accounting could, in general sense, be used to indicate,
Basically, the environmental accounting is the treatment taking an account of the environment and changes in it,
of various environmental issues of the corporate within and integrating the results with the system of SNA so as to
the financial statements. Environmental accounting provide a valuable information base for planning and
includes estimation of environmental expenditures, its laying policies for the integrated sustainable development
actual determination, and recognition of environmental and growth of the nation.
liabilities as well as, disclosure of all environmental
According to Shradhdha Singh, “Environment is the sum
liabilities in a specific section of the annual reports of a
of all Social, Economical, Biological factors, which
company. The modern business approaches like activity
constitutes the surroundings of man who is both creator
based management costing; TQM, business process-
and molder.”
reengineering, life cycle designing, life cycle assessment,
life cycle costing, etc. provide the platform for integrating The study of the inter-relationship between organisms and
environmental information into business decisions. their environment, as the economy of nature and as the
biology of eco-system”
In fact, it is a new branch of accounting with no hard and
fast rules, no standards or no legal compulsions on According to FEE (1995) give a definition: “Environmental
companies part to account and report for the Accounting concerns the treatment of environmental issues
environmental issues that is why certain socially within the financial statements and within environmental
conscious corporate houses are reporting about the impact evaluations.” Environmental reporting goes usually
of their activities on the environment in the director’s report beyond financial reporting and might take place in a
or separately. Generally the companies are disclosing separate report or in separate sections of the glossy
following information in their annual reports: brochure (out-side the financial statements).”
• Pollution prevention and control. Environmental Accounting - the entire domain of
accounting for the Environment including: financial
• Accumulation of current environmental costs.
accounting, reporting and auditing and environmental
• Physical data related to the reduction of waste. management accounting. Thus, Environmental
Accounting is a comprise of
• Present and future costs for products as well as
processes re-design. (i) Accounting Aspect of Environment of concern
• Estimation of future environmental costs and (ii) Reporting Aspect of Environment of a concern
benefits.
(iii) Auditing Aspect of Environment of a concern and
Environmental Reporting - the use of data about
(iv) Environmental Management Accounting of a
environmental costs and performance and its primary
concern.
purpose to support managerial decisions such as
a) Full cost accounting. c) Life-cycle costing.
• For better environmental performance.
b) Benefits assessment. d) Strategic planning.
• Investing in cleaner technology.
• Developing greener processes or products.

ENVIRONMENTAL REPORTING
• Decisions regarding product retention, production
processes, etc. Environmental reporting is disclosure of information
relating to environment in annual reports or by some other
( 36 )
C. K. Sonara, Dhaval Sharma, Ashav Patel
medium like in environmental policy statements or

corporate environmental reports (CER). Some important
definitions of the term environmental reporting are:
“Environmental reporting covers the preparation and

provision of information, by management, for the use of
multiple stakeholder groups (internal or external), on the
environmental status and performance of their company
or organization. This information is most often provided Fig. 1. Disclosure of accounting policies for
in a separate environmental report, but it may be included (i) Recording liabilities and provisions,
in other forms of reporting.” (ii) Setting up catastrophe reserves and
(iii) Disclosure of contingent liabilities.
“Environmental reporting is the term now commonly used
to describe the disclosure by an entity of environmentally
related data, verified or not, regarding environmental risks, LITERATURE REVIEW
environmental impacts, policies, strategies, targets, costs,
liabilities or environmental performance to those who have Today, protection of environment is the burning issue in
interest in such information; as an aid to enabling/ India; very few studies have been conducted in the area of
enriching their relationship with the reporting entity via environment. As far as environmental accounting and
either reporting is concerned, researcher has referred some books,
websites and journal before and during the study.
• the annual report and accounts package;
Researcher had reviewed the past few years published
• a stand-alone corporate environmental performance literature and data available from various publications,
report (ECER); some research work is certainly available which is
• a site-centered environmental statement; or described as follows.
• Some other medium (e.g. staff newsletter, video, CD Study - 1

-ROM, internet site).” Corporate Environmental Accounting and Reporting (A
These days, environmental reporting is described either Book)
as a branch of the corporate governance tree, or as one Researcher
aspect of the so-called ‘triple bottom line’-whereby data
on financial results, environmental performance and social Dr. Alok Kumar Pramanik
impact are brought together in what might be termed as a Publication year and ISBN No.
sustainability report.
2008: ISBN 978-81-8457-077-9
“Corporate environmental reporting should include
environmental protection initiatives taken by the Summary
enterprise, the adverse impact of its production process The book has focused on Corporate Environmental
and products on the environment both in quantitative and Accounting and Reporting. The study has taken sufficient
qualitative terms and its initiatives in process and product care to analyse and discuss the different aspects of
innovations in order to achieve sustainable growth.” corporate environmental accounting and reporting
Thus, environmental reporting refers to the disclosure of practices. This analysis based upon the different reports
environment related information by a company regarding published and research studies conducted by the different
Environmental risks, impacts, policies, strategies, targets, organizations and academicians of different countries The
costs and liabilities to the interested stakeholders through Book has been divided into seven segments.
the annual report or some other medium like video, Internet 1. Introduction
or staff newsletter.
2. Environmental Accounting: Concept, Objectives and
benefits
( 37 )
3. Corporate Environmental Accounting: Guidelines 4. Existing Studies and their Critical Evaluation
and standards
5. Corporate Environmental Accounting and
4. Environmental Reporting: Emergence and Reporting Expectation Gap: Evidence from India.
Relevance
6. Environmental Disclosure Practices of Selected
5. Framework of Corporate Environmental Reporting: Companies
Global Scenario
7. Summary, Conclusion and Suggestions.
6. Environmental Accounting and Reporting Practices:
The Book highlights on environmental accounting and
Global Study
reporting practices. The last part of the book is concluding
7. Conclusion and Suggestion remarks. The present study has covered three areas namely,
environmental accounting, reporting and auditing.
The Book highlights on corporate environmental
Keeping in view the observation of the study, suggestions
accounting and reporting practices. The last part of the
have been made in each of these three areas. The
book is concluding remarks. This part has also covered
recommendations are for the benefit of professional
few suggestions that the absence of standardized
accounting bodies, governments, regulatory authorities,
environmental accounting practices and disclosure
professional accountants, companies, and various
techniques at both the national and international levels as
stakeholders.
well as legal enforcement spur the advocated the
environmental accounting practices to consider other Study - 3
alternatives from a global perspective.
Corporate Environmental Accounting and Reporting (A
Study - 2 Book)
Environmental Accounting and Reporting - Theory, Law Researcher

and Empirical Evidence (A Book)
Prof. C. K. Sonara
Researcher
Publication year and ISBN No.
Dr. Shuchi P. Aahuja
2010: ISBN 978-81-9099-063-9
Publication year and ISBN No.
Summary
September 2009: ISBN 978 - 81 - 7708 - 220 - 3
The book has focused on Corporate Environmental
Summary Accounting and Reporting. The study has taken sufficient
care to analyse and discuss the different aspects of
The book has focused on Environmental Accounting and
corporate environmental accounting and reporting
Reporting - Theory, Law and Empirical Evidence. This
practices. This analysis based upon the different reports
book provides a broad introduction to the whole area of
published and research studies conducted by the different
environmental accounting and reporting (EAR). It covers
group wise organizations and academicians of India. The
environmental accounting, environmental reporting and
Book has been divided into six chapters.
environmental auditing together as these are interrelated
and form a very important part of a company’s 1. Introduction
comprehensive environmental management system. The
2. Research Methodology
Book has been divided into seven segments.
3. Globle Environmental Reporting
1. An Introduction
4. Corporate Environmental Accounting Practices in
2. Environmental Accounting and Reporting: concept
India
and Theoretical Framework.
5. Environmental Reporting - Problems and Prospects
3. Environmental Accounting and Reporting:
Regulatory Framework 6. Findings and Sugg estion
( 38 )
The Book highlights on corporate environmental environmental accounting practices and disclosure
accounting and reporting practices. The last part of the techniques at the national levels as well as legal
book is findings and suggestion. This part has also covered enforcement spur the advocated the environmental
few suggestions that the absence of standardised accounting practices to consider other alternatives from a
environmental accounting practices and disclosure global perspective.
techniques at the national levels as well as legal
Study - 5
enforcement spur the advocated the environmental
accounting practices to consider other alternatives from a A Book of Murthy, N. B.
global perspective.
Murthy, N. B. has written a book on “Environmental
Study - 4 Awareness and Protection” published by Deep & Deep
Publication, New Delhi in 2004.
Corporate Environmental Accounting and Reporting: An
Empirical Study of Different Groups of Selected Companies This book deals with various aspects of environment and
in India (A Book) ecology. Contents of the book are as follows:
Researcher Men and Equipment
Prof. C. K. Sonara Agriculture
Publication year and ISBN No. Mountains
2014: ISBN 978-93-81761-72-4 Forests & Wild Life Protection Environmental Education
Summary The book opens up newer horizons on the important
subject of environment studies and recommended as a
The book has focused on Corporate Environmental
study material for researcher and Government for
Accounting and Reporting: An Empirical Study of Different
protection of environment.
Groups of Selected Companies in India. The study has
taken sufficient care to analyse and discuss the different
aspects of corporate environmental accounting and
RESEARCH METHODOLOGY
reporting practices. This analysis based upon the different
reports published and research studies conducted by the The research work seeks to provide evidence on corporate
different group wise organizations and academicians of disclosure practice and polices of companies operating in
India. The Book has been divided into six chapters. India. For the same purpose, the annual reports of 50
companies belonging to various industries such as Cement
1. Introduction
Industries, Textiles Industries, Chemicals & Fertilizers,
2. Review of Literature Steel & Engineering and Oil Refineries & Petroleum etc.
have been selected for the study.
3. Research Methodology and Profile of Selected
Groups of Companies
4. Corporate Environmental Accounting and OBJECTIVES OF THE STUDY

Reporting Practices of Selected Groups of the
The main objectives of the study are stated below:
Companies in India
(1) To study the origin and to review the growth of
5. Corporate Environmental Accounting and
Environmental Reporting in corporate sectors.
Reporting - Problems and Prospects
(2) To know the Environmental Reporting and
6. Findings and Suggestion
disclosure practices in corporate sectors.
The Book highlights on corporate environmental
(3) To find out the matters whether awareness
accounting and reporting practices. The last part of the
regarding environment of the corporate sectors.
book is findings and suggestion. This part has also covered
few suggestions that the absence of standardised
( 39 )
(4) To derive conclusion and suggest measures for have been divided into five groups, i.e. Oil Refineries
effective Environmental Accounting and Reporting and Petroleum, Steel & Engineering, Chemicals &
Practices in corporate sectors. Fertilizers, Textile Industries, and Cement Industries
working in India.
(5) To suggest for the improvement in quality or
(4) The opinion of the person may be differing from
environment, resulting from control the pollution
time to time.
and damages of natural resources.
(5) The data of the Environmental Accounting and
Sample Design Reporting is available from the Annual Reports of
the selected companies for analysis.
There are various aspects of scientific research process.
When we have to determine the problem for research, at Environmental Disclosures
that time some of the decided units are selected for the
UNCTAD survey on environmental disclosure involving
study. The units must be adequate in the term of area, size,
203 responding corporations covered the 12-point
production and services. The researcher has selected 50
information disclosure.
companies for the study but he has studied only 30
companies from various groups of the companies of India.
Environmental Reporting Disclosures

1. Policies and reviews on environmental demands;
2. Major environmental issues, programmes and
policies and views and environmental demands;
3. Environmental targets, standards and output
measures;
4. Legal proceedings and information in the notes to
the accounts;
5. Financial Expenditure;
6. Products and services;
7. Research and Development activities;
8. Capital investment activities;
9. Operating and production activities;
10. Remediation activities;
11. Information in notes to financial statements
(accounts); and
12. Other pertinent environmental information.
Fig. 2
Period of the Study
A study of Corporate Environmental Accounting and

Reporting is for the period from the year of 2006-07 to
2010-11.
Limitations of the Study

(1) The study is mainly based on the secondary data
and supported by the primary data.
(2) The period of the study is from the year of 2006-07 to (Source: UNCTAD: International Accounting and Reporting Issues
2010-11. - 1992, III, p. 39.)
(3) The study has considered 30 units of the Fig. 3

manufacturing companies. All these companies
( 40 )
ENVIRONMENTAL ACCOUNTING AND The group- wise number of companies making

REPORTING PRACTICES IN INDIA environmental Reporting has been shown in above Table
- 1.
Being a developing country, India faces the common
problems of the third world. Moreover, with the I have selected 50 companies for the study of the
introduction of the Panchayat Raj Act by the 73 environmental reporting in India. It has been decided into
Amendment of the Constitution which envisages the five activity based groups.
decentralization of the administration at the district and
As we have come to know from the disclosure of the
village levels by formation of district jilla parishads and
companies, related environmental issues are not
village panchayats, the importance of such data and their
mandatory in India. That’s why 60% of the selected
services have further enhanced.
companies were making Environmental reporting in their
Few states taking advantage of the Liberalization Policy Annual Reports.
have liberalized the rules for extraction of minerals and
As far as industry-wise disclosure is concerned. Table - 1
use of other natural resources without caring for the future.
shows that Chemicals & Fertilizers has highest ranked in
It will be in fitness of the situation if a levy is imposed on
Environmental Reporting, i.e. 90%, followed by textiles
extraction and uses to be used, and compensate the loss
industries has ranked second highest i.e.80%, third rank
which the future generation may suffer on account of
oil refineries and petroleum i.e. 50% and steel &
liberalization policy.
Engineering and cement industries has equal Fourth rank
Table 1. Group-wise Number of Companies making i.e. 40% comparatively lower than Chemicals & Fertilizers
Environmental Reporting up to March, 2011 groups.
No. of Companies Table 2. Percentages of Various Parameters of
Groups of the No. of Sample making
(%) Environmental Reporting during the Period from the
Industries Companies Environmental
Reporting year 2006-07 to 2010-11
Group A Oil
Refineries & 10 05 50% (Figures in percentages)
Petrole um
Group B Ste el & Sr. Parameters of 2006-07 2007-08 2008-09 2009-10 2010-11
10 04 40%
Engine ering No. Environmental
Group C Ch em icals & Reporting
10 09 90% 1. Po llutio n Co ntro l 40 42 45 47 49
Fertilizers
2. Wastage 40 45 49 50 52
Group D Te xtiles
10 08 80% 3. Co nservatio n o f Energy 92 93 94 97 97
Ind ustries 4. Trees Plantatio n 40 45 48 50 55
Group E Cem ent 5. Enviro nm ental 60 62 64 68 69
10 04 40%
Ind ustries Pro gram m e
Total 50 30 60% 6. Enviro nm ental Po licy 60 62 63 65 67
and Stateme nts
7. Enviro nm ental Hazard s 20 22 24 26 28
(Source: Compiled from Annual Reports of the selected
companies.) (Source: Compiled from Annual Reports of the selected
companies.)
Graph - 1
Graph - 2
( 41 )
Almost all the selected companies were making disclosure are making environmental disclosure through quantitative
about conservation of energy during the period from the and 13% and 3% of the companies were making financial
year 2006-07 to 2010-11. and graphical presentation respectively.
It was 92% in the year 2006-07, it has increased up to 97% HYPOTHESIS TESTING
in the year of 2010-11. It was 93% and 94% in the year of
H i There is no significant difference between the
2007-08 and 2008-09 respectively. It is showing increasing
percentages of environmental reporting for various
trend in conservation of energy during the period from
parameters.
2006-07 to 2010-11.
Table 4. Descriptive Summary of Environmental
60% of the making Environmental Reporting are disclosing
Reporting for Various Parameters
the environmental issues in their environmental policy
Parameters N Mean Std. Std. Error
and statements in the year of 2006-07. It has increased up Deviation
to 67% in the year of 2010-11 during the period from 2006- Po llutio n 5 44.60 3.647 1.631
07 to 2010-11 of the 30 companies making Environmental Control
Reporting in India. Wastage 5 47.20 4.764 2.131
Conservatio n of 5 94.60 2.302 1.030
60% of the companies have disclosed contents such as Energy
amount spent on Environmental Programme in the year of Tree Plantation 5 47.60 5.595 2.502
2006-07. It has increased 69% in the year of 2010-11. Environm ental 5 64.60 3.847 1.720
Program ming
It has noted that most of the industrial units have disclosed Environm ental 5 63.40 2.702 1.208
about the preventive steps which they have taken for the Po licy
Environm ental 5 24.00 3.162 1.414
protection of environment rather than the effect of their Hazards
operations on the environment. That’s why disclosures Total 35 55.14 21.002 3.550
about Environmental Hazards and Pollution Control were Table 5. ANOVA
low percentage in implementation by selected companies Sum of df Mean F (p-value)
during the period from 2006-07 to 2010-11under study. Squares Square Sig.
Be tw ee n 14577.486 6 2429.581 162.436 .000
The analysis of annual reports of sample companies also
Gro ups
shows that old and reputed companies are more conscious Within 418.800 28 14.957
about the disclosure of environmental issues as compared Gro ups
to the new companies. To tal 14996.286 34
Table 3. Group-wise mode of Environmental As p-value is less than 0.05, there is a significant difference
Reporting between the environmental reporting values of various
Groups of the No. of Director's Report parameters.
Industries Companies Fin. Qty. Dctv. Grp.
making
Environmental Next table gives the Tukey’s Homogeneous Significant
Reporting Difference between various environmental parameter
A Oil Re fine ries & 04 1 2 2 -
Pe trole um values.
B Ste e l & Engine ering 08 - 3 4 1
C Ch e micals & 09 2 3 4 - Table 6. Tukey’s Homogeneous Significant
Fe rtilizers Difference
D Textile s Ind ustrie s 04 - 3 2 -
E Ce me nt Ind ustrie s 05 1 2 3 - Environmental Reporting N Subset for alpha = 0.05
Total 30 (60%) 4 (13%) 13 (43%) 15 (50%) 1 (3%) Parameters 1 2 3 4
(Source: Compiled from Annual Reports of the selected Enviro nme ntal Hazard s 5 24.00
companies.) Po llutio n Co ntro l 5 44.60
(Fin. - Financial; Qtv. - Quantitative; Dctv. - Descriptive; Grp. - Wastage 5 47.20
Graphical) Tree Plantatio n 5 47.60
Enviro nme ntal Po licy 5 63.40
It is clear from the Table- 3 that industries are reporting Enviro nme ntal 5 64.60
Pro gramm ing
environmental issues in the director’s report in the
Co nservatio n o f Energy 5 94.60
descriptive statement. It is also observed that 50% Sig. 1.000 .878 .999 1.000
companies are presenting environmental disclosure (The mean values of the parameters which are homogeneous
through descriptive statement and 43% of the companies are displayed in the same column)
( 42 )
There is no significant difference between Environmental (3) The combined radiative forcing due to increases in
reporting values of Pollution control, Wastage and tree Carbon Dioxide, Methane and Nitrous Oxide is the
plantation. largest climate driver.
There is no significant difference between Environmental (4) The combined radiative forcing of human - produced
reporting values of Environmental policy and green house gases, causing a net warming.
environmental programming.
(5) The Troposphere Ozone change is the one of the
reason of global warming.
NEW CONCEPTS IN ENVIRONMENTAL (6) Industrial pollution also a reason of the global
ACCOUNTING warming.
Global Warming Carbon Credit
Global warming means it is earth’s surface based upon The Environment Protection Authority of Victoria defines
worldwide temperature record that have been maintained a carbon credit as “a generic term to assign a value to a
by human since 1880s. It is the combined result of human reduction or offset of greenhouse gas emissions, usually
based emissions of greenhouse gases and change in solar equivalent to one tonne of carbon dioxide equivalent (CO2-
irradiance. In short the heat spread all over the world on e)”.
the surface of the land and ocean during the months from
Carbon credits and carbon markets are a component of
January to December. It is called global warming.
national and international attempts to mitigate the growth
According to World Metrological Organization (WMO), in concentrations of greenhouse gases (GHGs). One carbon
the decade 1998 - 2007 is the warmest on record. credit is equal to one metric tonne of carbon dioxide, or in
some markets, carbon dioxide equivalent gases. Carbon
Pollution control is to reduce the diverse effects of the global
trading is an application of an emissions trading approach.
warming. Therefore, Government and industries must be
Greenhouse gas emissions are capped and then markets
aware of environmental damages.
are used to allocate the emissions among the group of
A simple definition for climate change in relation to the regulated sources.
warming of the planet would be one that gets the gist
Carbon credits are certificates issued to countries that
without excluding the simplicities. The simplest and most
reduce their emission of GHG (greenhouse gases) which
accurate definition is that climate change is the effect
causes global warming. Carbon credits are measured in
greenhouse gases have on the earth’s climate. Greenhouse
units of certified emission reductions (CERs). Each CER is
gases include, but are not limited to, carbon dioxide and
equivalent to one tonne of carbon dioxide reduction. Its
methane. Going by the graphs and tables we were shown
rate stood at 22 Euros in April, fell to below 7 Euros, before
in the lecture, climate change is an undeniable truth.
stabilizing at 12-13 Euros. Under IET (International
Climate change is actually a naturally occurring
Emissions Trading) mechanism, countries can trade in
phenomenon unbeknown to most, but human actions are
the international carbon credit market. Countries with
speeding up the reaction. Greenhouse gases shouldn’t be
surplus credits can sell the same to countries with
seen as a bad thing because they are a necessary part of
quantified emission limitation and reduction commitments
our planet. If we didn’t have them the earth temperature
under the Kyoto Protocol. Developed countries that have
would average zero degrees.
exceeded the levels can either cut down emissions, or
Reasons of Global Warming borrow or buy carbon credits from developing countries.
The UNFCCC divides countries into two main groups: A
(1) Human activities have been one of the warming or
total of 41 industrialized countries are currently listed in
the earth’s climate system. Every environmental
the Convention’s Annex-I, including the relatively wealthy
variables, there are multiple factors that contribute
industrialized countries that were members of the
to the warmth of the earth.
Organization for Economic Co-operation and
(2) Earth’s annual average temperature also one of the Development (OECD) in 1992, plus countries with
factors leading to the scientific conclusion that the economies in transition (EITs), including the Russian
earth is now in a period of global warming. Federation, the Baltic States, and several Central and
( 43 )
Eastern European States. The OECD members of Annex-I Corporate Environmental Reporting for the type of
(not the EITs) are also listed in the Convention’s Annex-II. investigation. The various aspects of the reporting relating
There are currently 24 such Annex-II Parties. All other to the Environment, Received Environment Award,
countries not listed in the Convention’s Annexes, mostly Environmental Accounting in India, Mode of
the developing countries, are known as non-Annex-I Environmental Reporting and Parameters of
countries. They currently number 145. Annex I countries Environmental Reporting etc. were studied in detail during
such as United States of America, United Kingdom, Japan, the period from the year of 2006-07 to 2010-11.
New Zealand, Canada, Australia, Austria, Spain, France,
(1) Up to March, 2010-11 this study is consisted of 30
Germany etc. agree to reduce their emissions (particularly
units of the corporate having 05 groups of sector
carbon dioxide) to target levels below their 1990 emissions
working in India in different discipline and groups
levels. If they cannot do so, they must buy emission credits
during the period from the year of 2006-07 to 2010-
from developing countries or invest in conservation.
11.
Countries like United States of America, United Kingdom,
Japan, Newzealand, Canada, Australia, Austria, Spain (2) There are 05 various groups have been selected for
etc are also included in Annex-II. Developing countries the study up to March, 2010-11. i.e.
(non-Annex I) such as India, Srilanka, Afghanistan, China,
(A) Oil & refineries Companies
Brazil, Iran, Kenya, Kuwait, Malaysia, Pakistan,
Phillippines, Saudi Arabia, Sigapore, South Africa, UAE (B) Chemicals & Fertilizers
etc have no immediate restrictions under the UNFCCC.
This serves three purposes: (C) Steel & Engineering Companies
A) Avoids restrictions on growth because pollution is (D) Textiles Industries

strongly linked to industrial growth, and developing (E) Cement Industries
economies can potentially grow very fast.
(3) As we have come to know from the disclosure of the
B) It means that they cannot sell emissions credits to selected companies, related environmental issues
industrialized nations to permit those nations to are not mandatory in India that’s why 60% of the
over-pollute. selected companies were making Environmental
C) They get money and technologies from the developed Reporting in their Annual Reports.
countries in Annex II. (4) As for our industry wise disclosure is concerned,
Carbon Credit Business Chemicals & Fertilizers has ranked highest in
Environmental Reporting i.e. 90% because they are
Driven by its strong beliefs in the principles of Sustainable aware about dangerous effect of them to
Development and Corporate Social Responsibility, GFL environment.
has developed a UNFCCC-compliant Clean Development
Mechanism Project, which earns “carbon credits” by the (5) We found by analysis and interpretation of the data
thermal oxidation of a waste gas, HFC23, in its refrigerant available from the Annual Reports of the companies,
gas manufacturing plant, This was the first CDM Project that 97% of them were disclosing about energy
in the world to seek registration under the Kyoto Protocol, conservation in the year of 2010-11. That’s why 40%
and has been approved by the Governments of India, of the selected corporate units receive Energy
United Kingdom, Netherlands, Japan and Italy. Since Conservation Award up to March, 2011.
commencement, this project has reduced 13 million tones (6) As far as industry wise mode of environmental
of greenhouse gas emissions, and the carbon credits so disclosure is concerned. It is observed that Chemicals
earned have been sold to leading companies across the & Fertilizers have better mode of disclosure than the
globe for compliance purposes. Cement Industries,Textiles Industries and Steel &
Engineering companies because the mode of the
environmental disclosure depends upon the
MAJOR FINDINGS reputation and status of the company.
The present study was undertaken on the topic of
( 44 )
(7) Almost all the companies were making disclosure (4) Government should frame environmental policy at
about conservation of energy during the period from organization level.
the year 2006-07 to 2010-11. It was 92% in the year
(5) The company should disclose all relevant
of 2006-07, increased up to 97% in the year of 2010-
information regarding environmental efforts in
11. It was 93% and 94% in the year of 2007-08 and
separate section of annual report which will help
2008-09, respectively. So, we can say that it was
users of annual reports to understand easily.
increasing trend of conservation of energy during
the period from 2006-07 to 2010-11of the study. (6) Company should have a separate environmental
accounting department for the awareness about
(8) 60% of the making Environmental Reporting was
environmental protection.
disclosing the environmental issues in their
Environmental Policy and Statements in the year of (7) To conduct environmental audit at regular intervals.
2006-07, increased up to 67% in the year of 2010-11
(8) Company should take action for protection of
of the selected companies in India.
environment adoption of non-polluting technology,
(9) 60% of the selected companies were disclosed green belt, waste management and to save ecological
contents such as amount spent on environment balance in nature.
programme in the year of 2006-07, increased 69% in
(9) Company should create awareness about the
the year of 2010-11.
benefits of conserving the natural resources and their
(10) Discloses about trees plantation, wastage and effective utilization by conducting workshop,
pollution control were low percentage compared to conference and seminar.
conservation of the energy disclosure of the selected
(10) Full disclosure of accounting policies, procedures,
companies.
methods adopted are disclosed as a matter of
(11) Under study, the analysis and interpretation of the external reporting to serve all and sundry need.
Annual Reports of the selected corporate units also
shows that old and reputed companies are more
conscious about the disclosures of environmental CONCLUSION
issues as compared to the new companies.
Environmental accounting in physical terms is vital
(12) There is increasing trend in percentages of various particularly when it embraces collecting data that indicate
parameters of Environmental Reporting during the the direction and speed with which the quantity or quality
period from 2006-07 to 2010-11. It is in positive sign of a resource are exploited.
for the industrial and national environment.
In the environmental field many valuation issues are very
(13) There is significant difference between the difficult and more work is required before standard
percentages of environmental reporting for various valuation techniques can be applied. Bridging the
parameters. communication gap between environmental economists
and natural resources accountant will be forbidden in this
direction and some sort of approximation is essentially
SUGGESTIONS needed in environmental accounting to overcome the
discrepancies in the current arbitrary estimation
(1) For the Environmental Accounting and Reporting
techniques. Extensive study on environmental accounting
company should use leading international reporting
has been undertaken by a number of countries (e.g., Japan,
guidelines.
America, Canada, France and U. K.). The experience gained
(2) There is a need to promote adequate research, by them can be best utilized to proceed on these lines to
training and guidance. Guidelines and rules are draw internationally standardized accounting
needed to provide help to companies in disclosing methodologies in future for developing nations.
information in annual reports.
For the successful environmental accounting system
(3) Company should know about the environmental should have a method for accounting for full environmental
legislations for protection of environment.
( 45 )
costs and benefits into cost allocation. Ultimately the Management Decision Making The Management
business and the society both will be benefited by complete Accountant, November 2006.
integration of environmental cost and benefits in corporate
Baxter, Report on Environmental Health and Safety
decision making system.
Programme, 1997.
Bhatt, K., Environmental Accounting Corporate Disclosure

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NOTES & ARTICLES
Mohanty, Environmental accounting as a Management
Accounting Principal Board (APB), Statement No.4, Basic
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Concepts and Accounting principles Underlying
2005.
Financial Statements of Business Enterprise,
AICPA,(1970), Para 40. Oza, S. H., Environmental Accounting Linkage with
Management Control System. The Management
Annual Reports of Selected Companies, (2006 to 2011).
Accountant, October, 2004.
Bandhani, K.N., Measurement of Environmental
( 46 )
Prakash, Neetu, Environmental Accounting in India : A WEBSITES

survey of Indian Companies, The Management
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Accountant, August, 2006.
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Rao, P. Mohana, Environmental Accounting & Auditing -
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Rogar, Adams, Accounting for the Environment,
w w w . i s o 1 4 0 0 0 - i s o 1 4 0 0 1 / -
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environmentalmanagement.com
Sanjeevaiah, B. C., Environmental Accounting, Indian
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UNCTAD, International Accounting and Reporting Issues,

Chapter - III, 1992.
Dr. C. K. Sonara Mr. Dhaval Sharma

Professor Research Scholar
P. G. Department of Business Studies, S. P. University, V.
V. Nagar - 388 120, Gujarat. Email: [email protected]
Email: [email protected]
Mr.Ashav Patel,
Research Scholar
( 47 )
A Study on Efficiency of Select Regional

Rural Banks in India
Ayekpam Ibemcha Chanu and Shibu Das
ABSTRACT
The basic assumption of the paper is that Regional Rural Banks (RRBs) are special financial
institutions and studies on efficiency level of the RRBs are highly important in the present
day globalised financial system. The main objective of the paper is to measure the level of
efficiency of the select Regional Rural Bank of India. In addition, the paper also attempts to
explore the influential determinants that affect the level of efficiency of the select Regional
Rural Bank of India. This paper empirically investigates the efficiency of a sample of 35
Regional Rural Banks in India by using Data Envelopment Analysis (DEA). Both input oriented
and output oriented methods have been considered under the assumption of Variable Return
to Scale (BCC) technique and then Tobit regression approach to find the factors responsible
for efficiency. The findings reveal that there is variance in the efficiency score among the
RRBs in India and out of different variables, number of Branches and Fixed Assets have no
significant bearing on technical efficiency of RRBs in India during the study period.
INTRODUCTION
Performance of a bank is generally linked with the extent to which the resources are
utilised to generate revenue and it is explained by the ratio of output to input where a
larger value is indicative of superior performance1. According to Farrell (1957) efficiency
relate to how well a bank employs its resources relative to the existing production
possibilities frontier or relative to current best practice bank as well as how a bank
simultaneously minimises cost and maximises revenue based on an existing level of
production technology. However, according to Bhagavath (2006) efficiency is defined
as the success with which an organisation uses its resources to produce outputs i.e., the
degree to which the observed use of resources to produce outputs of a given quality
matches the optimal use of resources to produce outputs of a given quality. Hence, in
other words, efficiency may be defined as the ratio of actual output and input.
Indian banking system is characterized by well-developed banking system and

dominated by Public Sector Banks. At present, there are nineteen Nationalized banks
which have their branches in different parts of the country. The annual report of Reserve
Bank of India (2012-2013) shows that there are 921142 scheduled commercial bank
Key words branches (excluding regional rural banks) in India. However, many studies mentioned
that there is need to improve banking services in rural areas of the country and it is also
Financial literacy and
revealed that there is a gap of institutional credit in rural areas (Prashanth, 2015, Ahmed,
knowledge, financial
2014, Deb, 2011). With a view to fill up the institutional credit gap in the rural areas
behaviour and attitude,
with greater development potentialities, a new category of banks was set up in 1975 in
millennials, and
reflections the name of Regional Rural Bank (RRB). The RRBs were established in India with a
vision to boost rural economy by providing rural credit to farmers, agricultural labourers,
artisans and small entrepreneurship. The RRBs have been brought into existence by the
( 48 )
Ayekpam Ibemcha Chanu, Shibu Das
joint efforts of the central government, state government Few studies with regard to Indian commercial banks and
and commercial banks. The annual report of NABARD Microfinance institutions of northeastern region of India
(2012-2013) shows that there are 16,9093 Regional Rural have also been found in the literature. Study of Das, A, et,
Bank branches in India and total number of RRBs in India al (2005) on Indian Commercial Bank for the period of
is 564. 1997-2003, Zhao, et, al (2007) on Indian commercial
banking for the period of 1992-2004, Gupta, O.K, et, al.,
(2008) on Indian Banks for the period from 1999-2003,
SIGNIFICANCE OF THE STUDY Deb, J. (2011) on commercial Bank Branches which
operates in North Eastern region of India for the period of
Efficiency studies not only provide information but also
2003-2007, Singh, H. (2013)on Commercial Banks of India
throw a light on the proper utilization of inputs of the
for the period of 2001-2011, Chanu & Das (2014) on MFIs
organization. Such studies also can help the organization
of North East India, Das (2015), on Micro Finance
to formulate policies to improve their level of outputs. The
Institutions of Assam, for the period of 2011-2013, etc. are
present study is an attempt to study the technical efficiency
some of the studies which are found in the literature and
of the select RRBs in India. This type of study is important
reviewed for the present paper.
to RRBs to formulate the policies and programmes to
improve their level of efficiency.
RESEARCH GAP
REVIEW OF LITERATURE Though there are number of studies on efficiency of Banks,

no studies on efficiency of RRBs in India are found in the
This section is to provide an overview of literature on
existing literature. So the present study is attempted to fill
efficiency studies which have been published during 2000
the existing research gap.
to 2015 in relation with the present study. There are number
of studies which have been conducted with regard to
efficiency of banks by using both Data Envelopment
OBJECTIVES
Analysis(DEA) & Malmquist Productivity Index (MPI)
technique like Avkiran, N.K. (2000), Drake, L. (2001), The objectives of the present study are:
Caceres, J. F. (2002) , Zhao, T., Casu, B. and Ferrari, A.
• To measure the level of efficiency of the select
(2007), Deb, J. (2011), Singh, H. (2013). There are studies
Regional Rural Bank of India; and
which apply only DEA technique to measure efficiency of
banks and microfinance institutions. Some of them are • To explore the influential determinants that affects
Drake, et, al (2005), Yang, Z. (2009), Dang Thanh Ngo. the level of efficiency of the select Regional Rural
(2010) , Chanu & Das (2014) Takbiri, et, al, (2015), Das Bank of India.
(2015), etc. in some studies like Chinubhai, A. (2008),
Akmal, M. & Saleem, M.(2008), both DEA and Tobit
Regression Analysis have been used to measure efficiency HYPOTHESES:
of banks .
• H01= There is no significant difference in relation to
However, most of the studies are on commercial banks of level of efficiency amongst the Regional Rural Bank
foreign countries. For example, the studies of Avkiran, N.K. of India; and
(2000) on Australian commercial banks for the period of
1986 to 1995, Drake, L. (2001) on UK banks for the period • H02= All the determinants of Regional Rural Bank
of 1984-1995, Caceres, J. F. (2002) on Chilean Bank for the of India have same influence that affect the level of
period of 1989-1999, Drake, et, al (2005) on Hong Kong efficiency.
banks for the period of 1995-2001, Akmal, M. & Saleem,
M.(2008) on Pakistani Banks for the period of ten years METHODOLOGY
(1995-2005), Yang, Z. (2009)on Canadian Bank Branches, Type of study
study: Theoretical and empirical in nature.
Dang Thanh Ngo. (2010) on Vietnamese commercial banks Type of data :The present study is based on secondary
for the year 2008, Takbiri, O, et, al, (2015) on Bank Shahr data.
of Tehran, etc.
( 49 )
A Study on Efficiency of Select Regional Rural Banks in India
Sources of data : Data have been collected from Table 2. Details of inputs & outputs Variable
secondary sources: Annual reports of Regional Rural Bank Fixed Assets Prem ises, Furniture, Fixture etc.
in India in year 2014-2015; Published and unpublished Interest Interest o n d ep osits, interest to
documents maintained by banks; Reserve Bank India’s Expend ed bank to d ep osits
No . of Total Num ber of Em p loyees.
annual reports (various issues); Journals; Books; annual
Em p loyees
reports of NABARD (various issues); websites; Published Dep osits Current Account, Saving Bank
and Unpublished dissertation and theses; Research Deposits, Term Depo sits
articles from various journals have also been taken into Operating Paym ents to em p loyees, printing
consideration. Expend iture and statio nary, Ad vertisem ent
and publicity, Law charges etc.
Population Size : 56 (Total number of Regional Rural Bank Lo ans and Bills p urchased and d isco unted ,
in India 56)5. Ad vances Cash cred its, Overd rafts and
loans rep ayable on d emand ,
Sample Size : 35 (Thirty five) Term load s, Secured by tangible
assets, Unsecured .
Sample size determination design: purposive design ( Interest Earned Interest o n Ad vance, interest on
though there are 56 RRBs which are currently operating loan.
in the country, data cannot be generated from all the RRBs, Other Inco m e Co mm issio n, exchange,
bro kerage etc.
hence, the RRBs which are found to be getting data have
Investm ent Go vernm ent Securities, Mutual
been selected for the present study). Fund s etc.
Period of Study : The present study covers one financial Source: Annual Report of AGVB in the financial year 2014-
year i.e. April 2014- March 2015. 2015
In the present study Input Oriented and output oriented

measures are used to analyse the technical efficiency.6
LIMITATION OF THE STUDY
Efficiency measures can also be estimated with broadly
The study is limited to only 35 RRBs operating in India. two types of approaches which are parametric and non-
The study period is limited to only one year due the parametric approach7. However, in the present study non-
availability of the data which is extracted from the financial parametric- Data Envelopment Analysis has been used.
statements provided by different RRBs in India.
Data Envelopment Analysis (DEA): an overview
Selection of Inputs and Outputs Variables
It is widely used method to measure the technical efficiency
In empirical studies on efficiency of banking sector, an of any financial organisation. It is a linear programming-
important and controversial issue is selection of inputs based technique to measure the performance efficiency of
and outputs. According to Berger and Humphrey (1997), ), organizational units like bank; here, banks are known as
there are two main approaches – the production approach Decision Making Unit (DMU)8. The performance of DMUs
and the intermediation approach. In the present study is assessed in Data Envelopment Analysis by using the
production approach has been used to measure the concept of efficiency or productivity which is the ratio of
efficiency and on the basis of this approach following weighted outputs (virtual output) to weighted inputs
inputs and outputs variables have been chosen. In the (virtual inputs). The best performing DMU is assigned an
table 1 and table 2 shows different input and output efficiency score of unity (or 100 percent) and the
variables and their details explanations respectively. performance score of a DMU vary between 0 and 1. The
operating units of banks have multiple inputs such as
Table 1. List of Inputs and Outputs Variables
staff size, salaries and hours of operation, advertising
Inputs Outputs budget as well as multiple outputs such as profit, market
Operating Expenses, Interest Earned , share and growth rate. In this situation, it is often difficult
Interest Exp ended , Investm ent, Lo ans & for a manager to determine which operating units are
Dep osits Ad vances, Other Incom e
inefficient in converting their multiple inputs into multiple
outputs. In such situation, this problem can be easily
addressed by Data Envelopment Analysis and the analysis
( 50 )
may be conducted by using statistical software DEA- the ordinary least squares model and in most cases the
Solver. Tobit approach is sufficient in representing the second
stage Data Envelopment Analysis models.
It is widely believed that DEA was first introduced into
the operations in Research literature by Charnes, Cooper In the study, Operating Expenses, Interest Expended,
and Rhodes (CCR) in 19789. According to Singh (2013), Deposits, Interest Earned, Investment, Loans & Advances,
the original CCR model was applicable only to Other Income, No. of branches, Fixed Assets, have been
technologies characterized by constant returns to scale considered and Tobit Regression model has been
globally and later Banker, Charnes and Cooper (BCC), in conducted by using statistical software Gretl.
1984, extended the CCR model to accommodate
ANALYSIS AND RESULTS:
technologies that exhibit variable return to scale (Variable
return to scale is also known BCC model). In the present A. To measure the level of efficiency of the select Regional
study Variable Return to Scale i.e. BCC (IOM and OOM) Rural Bank of India:
has been used to find the level of technical efficiency.
Efficiency Results under the BCC Model (Input Oriented
BCC Model: The BCC model has its production frontiers Measured and Output Oriented Measured): ):
spanned by the convex hull of the existing DMUs. The
Table 3: of technical efficiency score of RRBs
frontiers have piecewise linear and concave characteristics
which, is shown in this Figure . Particulars BCC-IOM BCC-OOM
No . of DMUs 35 35
The BCC Model No . of fully efficient 15 15
RRBs in India
No . o f No t fully efficient 20 20
RRBs in India
Average 0.9079 0.9158
SD 0.1062 0.0997
Maxim um 1 1
Minim um 0.6771 0.6646
Source: Authors’ Calculation
Table 3 presents a summary of statistical results of

technical efficiency score and the scores are represented
Source: Cooper, W. W., Seiford, L. and Tone, K. (2002) P. 87 under the input oriented and output oriented BCC model.
Assume that this figure exhibits four RRBs, A, B, C and D, BCC-IOM: The efficiency of statistical analytical scores
each with one input and one output variable. The efficient presents in Table 3 indicates that out of 35 RRBs, there are
frontier of the CCR model is the line that passes through B 15 RRBs which are fully efficient and remaining 20 are not
from the origin. The frontiers of the BCC model consists of fully efficient RRBs under BBC-IOM. An efficiency score
the bold lines connecting A, B and C. The production equal to 1 means that the RRB is technically efficient. It
possibility set is the area consisting of the frontier together implies that efficient RRB could be minimizing the inputs
with observed or possible activities with an excess of input at given output level depending on the methodology used
and/or a shortfall in output compared with the frontiers. to estimate the DEA model. Average level of efficiency of
A, B and C are on the frontiers and efficient under BCC. D RRBs in the financial year 2014-15 is 0.907; it means inputs
is not on the frontier and inefficient under BCC Model. variable could be proportionately reduced without
changing the output level and it implies that the sample
Tobit Regression Model: RRBs in India are not fully efficient in that financial year
under the input oriented measured. The table also shows
For the second objective, Tobit Regression Model is used
that lowest score stands at 0.671 which means inefficient
in the present study to examine the determinants which
score is 0.329 (i,e. 1-0.671). Therefore, 32.9 percent inputs
can influence the level of efficiency10. According to Hoff
bundle could be proportionately reduced without reducing
(2007), the empirical results using the Tobit regression
the output level.
model analysis is more efficient and consistent than using
( 51 )
BCC-OOM: The efficiency of statistical analytical scores level of efficiency of RRBs in the study period is found as
presents in table 3, indicates that there are 15 RRBs which 0.915; it means outputs variable could be proportionately
are fully efficient and 20 are not fully efficient under BBC- increased without changing the input bundle. Further, it
OOM. Here also, an efficiency score equal to 1 means that also implies that the sample RRBs are not fully efficient
the RRB is technically efficient. It implies that the RRB is under output oriented measured in that financial year.
mazimising the outputs at given input level depending on The table also shows that lowest score is 0.664 which
the methodology used to estimate the DEA model. Average means inefficient score is 0.336 (1-0.664). Therefore, 33.6
percent outputs bundle could be proportionately increased
without introducing the input bundle.
Table: 4. Scores and Ranking of RRBs based on BCC-IOM and BCC-OOM
BCC-IOM BCC-OOM
RRBs in India
Score Rank Score Rank
And hra Pragathi Grameena Bank 1 1 1 1
Sap tagiri Grameena Bank 1 1 1 1
Langpi Dehangi Rural Bank 1 1 1 1
Arunachal Prad esh Rural Bank 1 1 1 1
Uttar Bihar Gramin Bank 1 1 1 1
Saurashtra Gramin Bank 1 1 1 1
Sarva Haryana Gramin Bank 1 1 1 1
Kaveri Grameena Bank 1 1 1 1
Karnatak a Vik as Grameena Bank 1 1 1 1
Malw a Gramin Bank 1 1 1 1
Sutlej Gramin Bank 1 1 1 1
Pud uvai Bharathiar Grama Bank 1 1 1 1
Pallavan Grama Bank 1 1 1 1
Bangiya Gram in Vik ash Bank 1 1 1 1
Paschim Banga Gramin Bank 1 1 1 1
Kerala Gram in Bank 0.977 16 0.982248 16
Telangana Gram eena Bank 0.975 17 0.975865 18
Baro da Rajasthan Ksethriya Gramin Bank 0.973 18 0.981576 17
Allah abad UP Gramin Bank 0.934 19 0.940599 19
And hra Prad esh Grameena Vik as Bank 0.911 20 0.911848 22
Narmad a Jhabua Gram in Bank 0.910 21 0.914025 21
Mad hya Bihar Gramin Bank 0.904 22 0.938218 20
Vananchal Gramin Bank 0.889 23 0.87455 24
Punjab Gramin Bank 0.864 24 0.882325 23
Trip ura Gramin Bank 0.852 25 0.854756 25
Prathama Bank 0.833 26 0.843461 26
Dena Gujarat Gramin Bank 0.825 27 0.833135 28
Mah arashtra Gramin Bank 0.819 28 0.826115 30
Vid harbha Konk an Gramin Bank 0.777 29 0.79023 31
Od isha Gramya Bank 0.754 30 0.827893 29
Jh ark hand Gramin Bank 0.733 31 0.721381 33
Assam Gramin Vik ash Bank 0.730 32 0.836241 27
Baro da Gujarat Gramin Bank 0.729 33 0.720824 34
Utk al Grameen Bank 0.710 34 0.733157 32
Jamm u and Kashm ir Grameen Bank 0.677 35 0.664619 35
( 52 )
The Table 4 presents the rank of RRBs based on their have fully technical efficient (Table 4) but table 5 shows
efficiency score. Out of fifteen RRBs which are fully that Paschim Banga Gramin Bank has been referred by
technical efficient under input oriented measured as well eighteen RRBs followed by Saurashtra Gramin Bank has
as output oriented measured in the financial year 2014- been referred by sixteen RRBs and Andhra Pragathi
2015, the table also shows that the Langpi Dehangi Rural Grameena Bank has been referred by fourteen RRBs under
Bank is the only rural bank from the North Eastern Region the BCC-IOM in the financial year 2014-2015. Under the
of India that has its operation in only two hill districts of BCC-OOM,, Paschim Banga Gramin Bank has been referred
Assam viz, Karbi Anglong and Dima Hasao stands rank by sixteen RRBs followed by Saurashtra Gramin Bank by
one. The score result shows that the fully efficient 15 RRBs fourteen RRBs and Andhra Pragathi Grameena Bank by
might use minimum bundle of inputs by producing or thirteen RRBs during the study period.
earning maximum level of output during the study period.
The reference set is determined as the set of DMUs which
The table also reveals out of the 20 not fully efficient RRBs
are in the optimal basic set of the LP problem. Fifteen RRBs
the Kerala Gramin Bank has the highest score with
have fully technical efficient (Table 4) but table 5 shows
0.9777and 0.982 whereas that Jammu and Kashmir
that Paschim Banga Gramin Bank has been referred by
Grameen Bank has the lowest score with 0.677 and 0.664
eighteen RRBs followed by Saurashtra Gramin Bank has
under the input oriented and output oriented measured
been referred by sixteen RRBs and Andhra Pragathi
respectively. .
Grameena Bank has been referred by fourteen RRBs under
the BCC-IOM in the financial year 2014-2015. Under the
BCC-OOM,, Paschim Banga Gramin Bank has been referred
Table 5.Frequency in Reference Set of RRBs under
by sixteen RRBs followed by Saurashtra Gramin Bank by
BCC-IOM and BBCC-OOM
fourteen RRBs and Andhra Pragathi Grameena Bank by
BCC-IOM BCC-OOM thirteen RRBs during the study period.
Frequency Frequency
Reference DMUs The findings clearly reveal that the efficiency level of all
to other to other
DMUs DMUs the RRBs of the country is not same. Hence, the null
And hra Pragathi 14 13 hypothesis, that there is no significant different in relation
Gram eena Bank
to level of efficiency amongst the Regional Rural Bank of
Saptagiri Gram eena 11 11
Bank India is rejected and the alternative hypothesis there is
Langp i Dehangi Rural 2 2 significant different in relation to level of efficiency
Bank amongst the Regional Rural Bank of India is accepted.
Arunachal Prad esh Rural 1 1
Bank B. To explore the influential determinants that affects the
Uttar Bihar Gram in Bank 2 2 level of efficiency of the Regional Rural Bank of India:
Saurashtra Gram in Bank 16 14
Kaveri Gram eena Bank 4 5 Correlation analysis has been conducted to check for
Karnatak a Vikas 5 7 potential multicolinearity problem in the regression. Table
Gram eena Bank 6 provides summary on the degree of correlation between
Malw a Gram in Bank 5 5 the explanatory variables used. In this table, it is found
Sutlej Gram in Bank 5 6
that all the variables have strong positive correlation
Pud uvai Bharathiar 4 3
Gram a Bank
among themselves except the number of branches. Though
Pallavan Grama Bank 6 5 the Number of Braches has positive correlation, the extent
Bangiya Gram in Vik ash 3 2 of correlation is very low. The result from the correlation
Bank coefficients leads to conclude that the number of branches
Paschim Banga Gram in 18 16 is not important variable in determining the technical
Bank
efficiency of RRBs in India in the financial years 2014-
Source: Author’s Calculation 2015.
The reference set is determined as the set of DMUs which

are in the optimal basic set of the LP problem. Fifteen RRBs
( 53 )
Table: 6. Correlation Matrix of Independent Variables
Operating Inte rest De posits Interest Investm ent Loans & Other No . of Fixe d
Exp enses Exp ende d Earned Ad vances Inco me branches Assets
Op erating Expenses 1.000
Interest Exp end ed 0.957 1.000
Dep osits 0.631 0.643 1.000
Interest Earned 0.961 0.989 0.655 1.000
Investment 0.885 0.933 0.594 0.924 1.000
Lo ans & Ad vances 0.774 0.805 0.760 0.809 0.749 1.000
Other Incom e 0.931 0.948 0.612 0.927 0.904 0.808 1.000
No. o f branches 0.514 0.306 0.270 0.314 0.235 0.223 0.384 1.000
Fixe d Asse ts 0.928 0.990 0.622 0.979 0.932 0.796 0.916 0.203 1.000

Tobit model used in this study may be specified as :
Table 7. The description and expected signs of the
predictors included in the regression analysis
Y1* = α + β1 (Operating Expenses)+ β2 (Interest Expended)
Variables Expected Hypothesis
Sign + β3 (Deposits) + β4 (Interest Earned)+ β5 (Investment)
Operating - A ne gative relatio nship with
+ β6 (Loans & Advances)+ β7 (Other Income)+ β8 (No. of
Expense s efficiency is expected
Interest - A ne gative relatio nship with branches) + β9 (Fixed Assets )+ ε
Expende d efficiency is expected
De po sits + A po sitive re latio nship with
In the second stage the DEA technical efficiency scores are
efficiency is expected.
Interest + A po sitive re latio nship with regressed on RRBs’ specific characteristics in order to
Earned efficiency is expected. identify sources of inefficiencies. Since efficiency scores
Inve stm ent + A po sitive re latio nship with range between 0 and 1, Tobit model is employed 11. Results
efficiency is expected. of the Tobit estimation are given in table 8. It should be
Lo ans & + A po sitive re latio nship with
noted that the dependent variable in the model is DEA
Ad vances efficiency is expected.
Othe r Inco me + A po sitive re latio nship with efficiency scores. Positive coefficients imply a rise in
efficiency is expected. efficiency, whereas negative coefficients mean fall in
No . of + A po sitive re latio nship with efficiency 12.
branche s efficiency is expected.
Fixe d Asse ts +/ - A bank fixed asse ts is no t
expected to have any
ascertained relatio nship with
e fficiency me asure .
Source: Authors’ Compilation

Table 8. Result of Tobit Estimation
Coefficient Std. Error z p-value
Const 0.884799 0.0522074 16.9478 <0.0001 ***
Operating Expenses − 1.24989e-010 7.64406e-011 − 1.6351 0.1020
Interest Expend ed − 5.56791e-011 3.95511e-011 − 1.4078 0.1592
Dep osits 3.23389e-013 3.19674e-013 1.0116 0.3117
Interest Earned 3.05326e-011 1.58905e-011 1.9214 0.0547 *
Investm ent 1.70813e-012 2.28483e-012 0.7476 0.4547
Lo ans & Ad vances − 1.06218e-013 8.19839e-013 − 0.1296 0.8969
Other Inco m e 4.37275e-010 1.93484e-010 2.2600 0.0238 **
No o f branches 0.000199015 0.000276244 0.7204 0.4713
Fixed Assets 7.03684e-011 2.21123e-010 0.3182 0.7503
Chi-square(2) 30.0597
Lo g-lik elihoo d 3.039669
No te: ***, **, * ind icate statistically significant at 1%, 5% and 10% respectively.
Source
( 54 )
Table 8 indicates the results of Tobit regression analysis. It issues immediately in order to achieve the very reasons of
figures out that by taking all the nine variable together, the reform in RRBs. It is also acknowledge that the RRBs have
overall goodness of fit of the model has been found to be to face ever increasing competition in the banking sector.
significant on the basis of Log-Likelihood Ratio. The result Many private and foreign commercial banks have already
reveals that all the explanatory variables conform to our been entered in the competitive market; it is also a real
prior expectation. However, the result shows that interest challenge of the RRBs. However, there is ample scope for
earned and other income are statistically significant. The improvement of RRBs. Hence, serious studies are called
results indicates that interest earned and other income are for to provide inputs to the banks, Policy makers, etc of the
positively and significantly related to RRBs technical country. We, the authors do also hope that the findings
efficiency. will open a fruitful avenue for future research in the area
of efficiency studies with regards to Regional Rural banks
RRBs’ interest earned is found to have a positive effect on
of the country.
technical efficiency at 10%
level of significance. On the other hand other income is

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Dr. Ayekpam Ibemcha Chanu Shibu Das

Assistant Professor (Sr.), Research Scholar Department of Commerce,
Department of Commerce, Assam University Diphu Assam University, Diphu Campus
Campus
( 59 )
DCF, Strategic Approach and Multi-Factor Model:

An Empirical Study to Explore a Rational Approach
to Capital Budgeting
Dipen Roy and Dhruba Charan Hota
ABSTRACT
Several financial and non-financial factors together affect the success of a long-term investment; hence,
acceptance or rejection of a project should not be made solely on the basis of an index of benefit obtained
from a method of normative financial appraisal. Multifactor models that encompass several dimensions of
decision-making into a standard framework can safely be used to avoid the biases and hubris. However,
in industrial practice of investment appraisal there is no consensus in matters of identifying the factors
and assessing their weights. This research paper fills this gap by chalking out a method in this regard.
The study unfolds that strategic, technical, economic and environmental factors together constitute
nearly 80% weights in investment decision-making. The paper recommends that empirical methods
may be used for exploring the factors and determining the factor weights; this can produce a pragmatic
approach to capital budgeting that eliminates the biases and subjectivity.
STATEMENT OF THE PROBLEM
Effective capital budgeting decision-making, which involves huge long-term investments

in expansion, renovation and capacity addition, is critically important in determining
strategic success and survival of a corporate house. 'Decisions of this nature help a
company to mould its future opportunities and develop competitive advantage by
rebuilding its technology, its processes and capacity (Kersyte Agne, 2011)'.
Financial evaluation of an investment proposal is essentially a formal step in the process

of capital budgeting, which is undertaken for assessing the economic merit of the
investment proposal so that resources can be earmarked, approved and allocated.
However, in the process of assessing merit of a capital budgeting proposals,
contemporary finance managers and CFOs assign a great degree of emphasis on
normative financial appraisal [See, Horngren, et al. (1996), p-703; Graham and Harvey
(2002); Brigham and Houston (2004), Andor G., et al. (2015)] and neglect myriads of
other important non-financial factors that predominantly contribute to the success of
the investment projects.
CFOs grossly use financial appraisal methods such as DCF as well as sophisticated
methods of real options and risk analysis, to convince the board members that the
concerned project qualifies the financial benchmark; hence, the project may be approved
Key words
and funds may be allocated. Findings from research studies, undertaken in Indian or
Capital Budgeting, abroad, confirm this truth [See, Gitman and Forrester (1987); Pike (1996); Graham and
Shareholders' Wealth, Harvey (2002)]. In India notable of such studies were done by Porwal L S (1976),
Non-financial Factors Pandey I M (1989), Babu C Prabhakara (1995), Anand Manoj (2002), Shah Kamini
(2008) and Gupta Divya ( 2013). In more than 90% of the studies, the researchers devoted
their attention on surveying the methods and techniques of normative financial
appraisal.
( 60 )
Dipen Roy, Dhruba Charan Hota
NON-FINANCIAL FACTORS
Success of a project, in practice depends on numerous

financial and non-financial factors. Agne Kersyte (2011)
points that satisfying an index of financial benchmark is
only one step, which indicates that project is desirable.
Mohamed and McCowan (2001) argue that "financial
evaluation is only a part of the whole decision-making
process". It indicates that even if the financial parameters
are extremely attractive, neglecting other qualitative
aspects may create serious problems in making a project a
success.
The important non-financial factors that add to the success

of an investment proposal are environmental clearance,
social acceptance, organizational structure, workers'
commitment, political patronage, technological feasibility
and so on. Ignoring either of these factors in the process of
making a capital budgeting decision is thoroughly Fig.1: Non-Financial Factors of Capital Budgeting
mistaken. In the corporate world, the evidences of the Mohamed and McCowan (2001) advocate that non-
adverse consequences of ignoring such non-financial monetary project aspects are required to be carefully
factors are numerous. analyzed so that they can be managed. 'In extreme cases,
Meredith and Mantel (2000) provide a list, which includes neglect of these aspects can cause the failure of a project
both financial as well as non-financial factors affecting despite very favourable financial components'. The
success of an investment. Skitmore et al., (1989), Lopes majority of organizations resort to estimating the necessary
and Flavell (1998), Adler (2000) and Love et al. (2001) point money contingencies for these qualitative aspects without
to the need for taking into accounts both financial and an appropriate quantification of the effects of these factors.
non-financial aspects of capital budgeting to make a
decision logically sound. Influence of various non-
financial factors on Capital Budgeting can be summarized STRATEGIC INVESTMENT DECISIONS
in the form of a diagram shown below; [See Fig. 1]. Due to To manage the business in 21st century the corporate
disregard for these non-financial factors, many of the houses have begun to adopt strategic approach to
projects with very good index of financial prospect have management (Boone & Kurtz, 1992). Porter E Michael (1980)
been abandoned half-way, resulting in wastage of has outlined the methods and tools of formulating
shareholders' wealth. Debacle of Tata Motor's Singoor competitive strategies. However, industry practice of
Project, which was formulated for assembling the cheapest adopting strategies for capital budgeting is not unique;
Nano car, can be cited as a living example of this nature. In instead, it varies with respect to countries, where it is
the context of such industrial evidences this study points practiced as well as contextual categories and focus of the
to the need for analyzing both the financial and non- companies concerned.
financial factors for making capital budgeting analysis
objective and rational. Carr Chris et al., (2010) report that in the context of capital
budgeting UK companies put strong emphasis on financial
While it is understood that besides financial factors, considerations, while Japanese and German companies
relevant non-financial factors should be incorporated into downplay financial evaluations; the companies in these
the analysis, yet, unfortunately, in industrial practice of two countries put strong emphasis on strategic
investment appraisal no consensus method could be considerations. Between these two diametrically opposite
chalked out to facilitate identification of the factors and practices, the companies in the USA follow a balanced
assessing their weights. This study focuses on the necessity approach; they place emphasis on both financial and
of finding a methodology for filling this gap. strategic considerations.
( 61 )
DCF, Strategic Approach and Multi-Factor Model: An Empirical Study to Explore a Rational Approach to Capital Budgeting
Contrary to the straightforward observations noted above, Quite different line of approaches have been noticed in the
Alkaraan and Northcott (2006) report that some studies of Carr, Chris et al.(2010), Shapiro Allan (2013),
companies in UK take the investment decision solely on Kaplan and Atkinson (2003); they have handled the issues
the basis of sophisticated financial analysis; side by side, of strategy and technology. Organizational factors and
many of the companies overlook financial appraisals and decision-making mechanism down the hierarchical layers
put strong emphasis on strategic analysis; this second of the organization have been analyzed by Bower Joseph
group of companies use traditional payback period, to (1970). Later Karsyte Agne (2011) has focused attention on
complete a half-hearted compliance of financial appraisal. the process approach to capital budgeting; the scholar
observes that management in the organization has different
Carr Chris et al., (2010) classify firms fighting competition
objective other than shareholders' wealth maximization;
in market into four different contextual categories such as
so, they try to influence the outcome of the decisions so
market creators, re-focusers, value creators and
that interests of management is better served. These
restructurers. The authors point that market creators give
observations are in line with the managerial models of
strong emphasis on long-term market development and
Williamson O (1963) and Marris R (1963).
positioning; so, these companies put very strong emphasis
on strategic considerations, while restructurers give strong Skitmore et. al. (1989), Flavell (1998), Adler (2000) and Love
emphasis on financial considerations. In between these et al. (2001) point to the need for taking into accounts both
two, re-focusers and value creators give attention to both financial and non-financial aspects of capital budgeting
strategic and financial considerations in their decision- decisions. Moutinho Nuno (2010) examines non-financial
making process; however, compared to value creators, re- factors and non-financial risks affecting capital budgeting
focusers set moderate financial targets. decisions.
Shapiro Alan (1993) points that good understanding of The survey of the studies gives a common reflection that
corporate strategy helps in designing potentially profitable while each researcher wants to make a dedicated focus on
projects. According to him, perhaps the best way to gain a point, other points he misses or leaves untouched. It is a
this understanding is to study medley of firms, spanning fact that if several factors are not comprehensively
a number of industries and nations that have managed to analyzed, a well encompassed rational decision cannot
develop and implement a variety of value creating be made. This study aims to address this issue and focuses
investment strategies" (p.77). With right strategies a on studying methods that simultaneously analyze large
company can succeed in creating value for its shareholders numbers of factors such as financial, non-financial,
even in the difficult industrial scenario. technological, organizational, etc. into a decision-making
framework so that capital budgeting decisions can be made
objectively without getting misled by biases and hubris.
RESEARCH BACKGROUND
Research study in capital budgeting is not totally an

OBJECTIVE OF THE STUDY
unknown area. A good number of researchers have made
remarkable studies in India and aboard. Notable of the a) To examine the methods of normative financial
foreign studies are there to the credit of Gitman and appraisal used in corporate houses in India.
Forrester (1987), Pike (1988, 1996), Arnold and b) To examine the validity of relationship between use
Hatzopoulos (2000), Graham and Harvey (2002), Ryan of DCF and shareholders' value creation.
and Ryan (2002), George Kester and Geraldine Robbins c) To discuss the limitations of DCF methods that
(2011), Lu Jin-Ray, et al (2015). In India notable studies results in mistaken investment decisions.
have been done by Chandra P (1975), Porwal L S (1976),
d) To identify the factors, which considerably influence
Pandey I M (1989), Babu Prabhakara C (1996), Anand
investment decisions of the firms.
Manoj (2002), Shah Kamini (2008), Yadav Vinod Kumar
(2013). The studies enlisted above are almost similar in d) To make a review of multi-factor models of capital
nature, consisting of surveys of practices prevailing in the budgeting.
industry. A survey of these studies leads to the generalized e) To assess relative importance of financial and non-
finding that the corporate houses are gradually increasing financial factors of capital budgeting.
the use of sophisticated DCF methods.
( 62 )
METHODOLOGY companies are having average annual capital budget

between Rs. 1,000 and Rs. 5,000 crores.
Methodologies used in the study are analytical, empirical
and experimental. Empirical analysis is based on
statistical analysis of primary data and secondary data.
FINANCIAL APPRAISAL METHODS: A GLIMPSE OF
Secondary data have been collected from NSE share price
THE PRESENT PRACTICE
database and Annual Report of the respective companies.
Primary data have been collected directly from the CFOs Financial appraisal is necessary to assess the desirability
of a sample of 30 randomly selected companies listed on of an investment proposal. Different methods are there for
NSE through personal interview with printed financial appraisal of long-term investments. These are
questionnaire. The questionnaire was drafted with categorized as traditional non-DCF methods and DCF
multiple-choice type objective questions that cover points methods. Internal Rate of Return (IRR), Modified Internal
like size of investment, choice of appraisal method, Rate of Return (MIRR), Net Present Value (NPV) and Net
importance assigned to various financial and non-financial Terminal Value (NTV) belong to DCF category. On the other
factors, sources of fund for financing the investment hand, Payback Period and Accounting Rate of Return
proposal, people who take part in decision making, etc. (ARR) fall under Non-DCF category. Sophisticated
methods that count the worth of real options and risks are
As response level is very low, the study takes very long
extended versions of DCF methods. Based on the data of
time in interviewing and gathering responses from CFOs
the survey findings popularity of the methods (expressed
of the sample companies. The study covers the period of
in percentage terms), has been shown by a histogram as
five years, from 2010 to 2015. Tools like descriptive
shown in Fig. 2.
statistics, z -test, ?2 test, sign test and Factor Analysis have
been used for arriving at scientific conclusions.
Analytical and experimental methodologies have been

used to unfold the limitations of DCF method, which
sometimes results in accepting undesirable investment
proposals causing destruction of the value of the firm.
THE SURVEY: CHARACTERISTICS OF COMPANIES

SURVEYED
The sample of 30 companies was drawn from 14 different Fig.2: Popularity of Various Appraisal Methods
industries located at different parts of the country. The
data so compiled from questionnaire responses from the Out of 30 companies, only 2 companies report that they do
cross-section of the industries are supposed to reflect the not use any DCF method, while 28 companies use have
contemporary industry practices followed by the corporate been found to use DCF methods, alone or in combination
houses in India. Characteristics of responding firms and with non-DCF methods. That is, overall 93% companies
responses received from them have been described briefly use DCF methods. If this outcome is compared with the
in the paragraph below. findings of Porwal (1976) [which was just 31%], the
difference appears highly significant. It can be confidently
Of the 30 companies surveyed, 25 companies are Public concluded that a significant shift has taken place in
Limited Companies and 5 are Government Companies. 22 industry in respect of the use of DCF methods in project
companies belong to manufacturing sector, 6 to service appraisal.
sector and remaining 2 belong to both manufacturing and
service sector.
SIMULTANEOUS USE OF MULTIPLE METHODS
17% of the sample companies, are having average annual
capital budget of less than Rs. 500 crores. 50% of companies Out of the 30 companies surveyed, only six companies
are having average annual capital budget between Rs. 5, have been found to use a single method for project
00 and Rs. 1,000 crores. On the upper segment 33% of appraisal. Remaining 24 companies are found to use
( 63 )
multiple methods for appraisal of their project proposals. Since computed Z is greater than critical value (1.645), the
Three companies have been found to use four methods alternative hypothesis that the firms depend on the use of
simultaneously to arrive at their final decision. Thirteen multiple methods for evaluation of projects has been
companies have been found to use 2 methods, while eight accepted.
companies have been found to use three methods side by
'Very recent research findings' [i.e., Graham and Harvey
side. The data regarding use of multiple methods have
(2002); George Kester and Geraldine Robbins (2011)] show
been shown in Fig. 3 with the help of histogram as shown
that Finance Executives most frequently use three methods
below:
such as IRR, NPV and Payback Period. Therefore, the
findings of the study are in line with the findings of studies
made abroad in developed countries.
DCF Methods of Appraisal, Profitability and

Shareholders' Wealth
Capital Budgeting is the most important of the three

decisions, when it comes to the creation of shareholders'
wealth (Van Horne James, 2003). Using secondary and
survey data Klammer Thomas (1973) observes that there
is an association between choice of DCF techniques and
Fig. 3: The Trend of Using Multiple Evaluation financial performance of the firm. Indeed the findings may
Methods be true, because the future financial performance of the
firm depends on investment decisions made today.
Use of multiple methods can be explained as an attempt to However, survey results and observations of many other
taking into account the different attributes of an investment. studies fail to confirm existence of any verifiable
It is observed that vast majority of the companies use relationship between use of the methods of normative
Payback Period method in addition to DCF methods like financial appraisal and shareholders' value creation. For
IRR and NPV. It indicates that majority of the companies example, Graham & Harvey (2002) and Ryan and Ryan
insist on liquidity in addition to profitability. Since 80% (2002) report that more than 90% companies use DCF. In
companies use multiple methods, it can be safely stated practice 90% companies surveyed by them don't have the
that instead of using a single method, Indian companies track record of unfailing value creation over the last one
use multiple methods for financial appraisal of investment decade.
proposals. Statistical validity of the inference can be
established with a non-parametric sign test as given below.
For conducting the test, firms using multiple methods are This paragraph is meant for presenting the result of the
assigned plus signs and those using single method are study of the relationship between 'use of DCF' and market
assigned negative signs. Null Hypothesis and Alternative value addition. To pursue this study, a careful watch was
Hypothesis are H0: P(+) = 0.50 and H1: P(+) > 0.50. The kept on the movement of share prices of the companies
test is done at 5% level. that were included into the sample. The survey of financial
Number of Plus (+) sign, X = 24 appraisal methods, shown in [see paragraph 6] Fig. 3,
Number of Minus (–) sign = 6 shows that 93% companies use theoretically satisfactory
Sample size, n = 30 DCF methods. Had DCF been the proven methodology of
investment selection, all the companies should have the
Z= (I) track record of positive market value addition in terms of
rising market price of the shares of respective companies.
Table 1 given below gives the summary result of share
Z= = 3.28 > 1.645 price movement of the companies surveyed along with
their practice of using DCF and non-DCF methods. This
part of the study was continued for a span of three years,
For right-tailed test 5% Critical Value of Z = 1.645
from 2012 to 2015. There is no association between 'choices
of appraisal methods' and 'Market Value Addition' is the
( 64 )
null hypothesis of this study. Data collected from sources theory, recommends matching of costs with benefits. In
mentioned above have been compiled in Table 1, shown DCF methodology cash inflows get unmindfully treated
below. as measures of benefits, which can be compared against
the investment costs.
Table 1. Use of Appraisal Method and Market Value
Addition Second fallacy of DCF is under-statement of costs, which
is counted as a violation of accounting principle; this is
unconsciously done while discounting is straight
forwardly applied to future costs. As per accounting rule
(Convention of Conservatism) costs should not be
understated. Discounting of costs is going against this
accounting prescription. How discounting of costs, as
Out of 28 companies using DCF, only 15 companies have applied in the process of computing NPV, results into
the record of rising share price, while 13 other companies choosing one unprofitable project has been illustrated in
experience declining share price. It means only 15 the following paragraph.
companies created wealth for their shareholders, while
remaining 13 destroyed the wealth. Of the two companies Discounting of Future Cost: Violation of Accounting
not using DCF, one has the record of rising share price, Principles
while another has the record of declining share price. Chi- In case of unconventional cash flows DCF results in serious
square computed from table after Yates correction is 0.40. distortions to its valuation result. Owing to some
The result leads to accepting the null hypothesis, which conceptual ambiguity, academicians are not taking any
refutes the claim that choice of DCF can undisputedly add initiative to take any remedial step against these kinds of
to market value addition. flaws. Example shown in Table 2 makes the point clear.
Plenty of evidences are there that even after applying Table. 2.Project X: An Example of Confusion
prescribed principles of DCF appraisal, large numbers of
firms are saddled with mounting losses during the period
between 2005 and 2015. Just complying with the decision
rules outlined in DCF methods does not act as a guarantee Project X, as shown in Table 2, is an unprofitable investment
that firms will finally succeed in creating value for the proposal; simple arithmetic shows that the sum of inflows
shareholders. This is due to the inherent limitations of the is equal to $8400, while sum of outflows is $9200. Having
DCF methods, which have been discussed in the following a look at the figures given in Table 2, anybody with sense
paragraphs. of simple arithmetic will say that it is an unprofitable
project. However, using a high discounting rate like 25%
an optimist analyst may present a picture of a sizeable
LIMITATIONS OF DCF METHODS: VIOLATION OF value addition of $112 as given below.
ACCOUNTING PRINCIPLES
The logic of discounting and calculation of NPV seems – 1000 = 112

strongly convincing; it defines NPV as equivalent to
wealth. Therefore, 'choosing projects with higher NPV'
Applying DCF to this problem is amounting to violation
amounts to maximization of shareholders' wealth.
of accounting convention, because here second year's costs
Unfortunately the fallacies of DCF have been never
have been heavily discounted. "When this type of
questioned, except the cases of fictitious NPV pointed by
understatement of costs is done, firms unknowingly
Roy Dipen (2008).
compute an index of fictitious NPV", (Roy Dipen, 2010).
DCF is neither accountancy nor economics, but a simple At the time of computing IRR, while future benefits and
method of translating future pay-off into their present future costs of several years are simultaneously
value equivalents. The major fallacy of DCF is that it discounted, in some cases, accountants may get a
suggests matching of PV of cash inflows with investment compulsion rate, instead of earning rate, IRR; however, as
costs. Matching concept, as it is understood in accounting this phenomenon has not been sincerely analyzed in any
( 65 )
serious research studies, many investors treat a IMPORTANCE OF STRATEGIC CONSIDERATIONS

compulsion rate as earning rate. It definitely makes an IN CAPITAL BUDGETING: A SURVEY
investor to lose money by investing in unprofitable projects.
Strategic considerations indeed have enormous influence
The following paragraph is presenting an explanation as
on capital budgeting decisions. To measure, along with
to why IRR stands as an index of compulsion rate instead
other variables, the degree of importance that the firms
of an earning rate.
assign on strategy in formulating capital budgeting
Table 3: IRR is a Compulsion Rate not Earning Rate: proposals, a sample of companies listed on NSE has been
An Example surveyed. The responding companies were asked to assign
value to different variables on a five point scale. The
summarized result of the survey has been shown in Table
4. It is amazing that in a list of eleven variables, the
responding firms recorded the second highest average
score to strategy. This average is 4.19, which is much higher
Table 3 shown above gives the stream of cash flows in the than 2.50, the theoretical average. It indicates that firms
second row and present value of cash flow at 20% are keeping their strategies in the forefront every time
discounting rate in the third row. Sum of the PVs is equal capital budgeting proposals are designed and evaluated.
to zero, which means that IRR is 20%. It is definitely not
the earning rate, but the compulsion rate. Discounting of Table 4: Decision Variables and their Importance
second year's cost of $7200 at the rate of 20% reduces it to
$5000. It creates a compulsion of making $5000 of today to
grow into an equivalent amount of $7200 in the second
year for meeting expenditures at that time. Compared to
discounting of benefits, discounting of cost conveys the
just opposite meaning. So, in the process of applying DCF,
making discounting of cost and benefits together a big
fallacy is injected into the process of valuation. After all, In the second part of the study, CFOs of the responding
while such an attractive IRR is obtained from calculation, firms were asked to specify the objectives on which they
nobody has any reason to rethink if it is a compulsion rate, assign the highest priority. The summary of the responses
or an earning rate. has been tabulated below in Table 5. The readings of last
column show that the firms assign the highest priority to
Thirdly, in economics, production is a function of labour
acquiring the biggest market share. The second highest
and capital; Q = f (L, K). Hence, actual gains can be obtained
importance they assign on steady sales growth. Only nine
only after charging the total costs, C = w.l +c.k. , which
companies indicate that they give very high priority to
consists of cost of labour w and cost of capital, k. An
gradual rise in share price, which really amounts to
objective index of true benefit can be obtained by
shareholders' wealth maximization. This is the lowest
discounting the streams of future benefits, not the absolute
number shown in the last column. The findings indicate
figures of inflows. Mistakenly, in DCF methods we discount
that the emphasis of contemporary management is
cash inflows and outflows and compare the output with
assigned considerably on the corporate strategy, which is
the initial investment costs. Both in practical and
a major shift from the traditional goal of maximization of
theoretical sense it is mistaken.
shareholders' wealth.
Finally, if there is no cash inflow in a year, no discounting
Table 5: Priority Assigned to Objectives
is applied there. It means that no holding cost of capital
gets charged, if no inflow is really obtained. This cannot
be accepted as a good practice of economics. As a remedy
to this problem, present value of the streams of EVAs
produced by a project in different years can be treated as a
combined index of economic gain resulting from a project.
Source: Survey Responses
( 66 )
The findings presented in Table 5 reflect that companies This may result in choosing a project of lesser merit that
today don't get confined to pursue a single goal; instead, has limited contribution to company's mission or goal. To
they strive to reach multiple goals with different levels of overcome the limitations of the above methods, Weighted
priority. Therefore, a method of appraisal using the Factor Scoring Model has been recommended. This method
measure of a single goal is inadequate to stand as the perfect has been discussed in the following paragraph.
method of appraisal in capital budgeting. It points to the
Weighted Factor Scoring Model
need for using a method that simultaneously takes into
account several factors and accommodates several goals. In Weighted Factor Scoring Model, in the first step the factor
scores are assessed on the basis of level of attainment on
FACTOR MODEL
the factors; later, weights are assigned to different factor
Traditional financial models such as IRR or NPV confine scores, based on the relative importance of the factors in
the focus of investment appraisal on a single decision the attainment of the corporate objective. Symbolically the
criterion, - profitability, which inherently suffers from short- method can be expressed as below:
run bias. In real world, when the selection of a long-term
investment proposal is done, multiple criteria and myriads
of constraints are taken into account. The nominal financial
appraisal based on DCF models cannot capture the
complexity and trade-offs involved in the real life decision-
process of project selection. In an attempt to overcome the
limitations of DCF models, some comprehensive models The weight wj may be generated using Delphi Method.
encompassing multiple variables and criteria have been However, this method is grossly subjective; because, the
developed. Some of those models include weights are initially decided by experts based on their
a) 0-1 Factor Model wisdom. How a set of important factors can be identified
b) Un-weighted Factor Scoring Model for evaluation has not been indicated in the model.
c) Weighted Factor Scoring Model Secondly, no objective method has been recommended for
d) Constrained Weighted Factor Scoring Model determining the weights of the respective factors. Next part
of this research work is dedicated to handle the issue.
In some standard textbooks of project management,
thorough discussions about different factor models are FACTOR ANALYSIS, FACTOR EXTRACTION AND
available [see Meredith and Mantel (2000)]. FACTOR WEIGHTS
While applying 0-1 Factor Model, senior managers and This paragraph is dedicated to identifying the relevant
experts assign 1 to a factor, when the project qualifies the factors and determining the corresponding factor weights
given factor and assigns 0 if it does not. The project that so that Weighted Factor Scoring Model can be successfully
qualifies sufficient number of factors is selected. In case of used. To meet this goal, at the time of field survey,
mutually exclusive projects, the project that qualifies the responding CFOs were asked to assign value to each of
highest numbers of factors is recommended for selection. the variables enlisted in Table 6, given below, on the basis
The fundamental merit of this method is that the appraisal of their relative assessment of importance. The respondents
is made on the basis of several criteria, instead of a single were asked to mark score for each variable on a '5 point
criterion. The limitation of this model is that it does not scale' of 1 to 5 (1 meaning "unimportant", 5 meaning "very
categorize the factors in terms of their relative importance important").
in the context of the firm's survival and the goals for which
the firms strive. This method gives equal weights to all Table 6: List of Variables Affecting Selection of a
factors. Project
In Un-weighted Factor Scoring Model, instead of assigning

0 and 1 to a factor, scores are determined on the basis of the
degree of accomplishment of the factor. The limitation of
this method is that some less important factors may have
high scores and this can make the total score too high.
( 67 )
The data gathered from the questionnaire responses have factor may be called strategic factor. Technology and work
been analyzed to explore the important dimensions of convenience strongly contribute to second factor; hence,
capital budgeting decisions. SPSS output of Factor Analysis second factor may be called technological factor. The third
has been given below in Table 7 and Table 8: factor is constituted by profits and costs; hence this factor
may be termed as economic factor. In the fourth factor the
Table 7 :Total Variance Explained
major contributing variable is environment; hence, the
fourth factor may be termed as environmental factor.
Table 9: Reliability Statistics
Reliability Statistics, Cronbach's Alpha computed from the

compiled data is 0.728. It indicates that result obtained
from the study is reliable. The result of the study reflects
that consciously the Indian corporate houses assign the
highest weights to strategic factors; Weights that they assign
Extraction Method: Principal Component Analysis.
to different factors are as shown in Table 10 given below:
Table 10: Factors, Eigen Values and Factor

The output given above indicates presence of the influence
of four different factors in the process of capital budgeting. Weights
Component matrix, as shown in Table 8, is explaining
contribution of variables in the construction of factors.
Table 8: Component Matrixa
Therefore, while in industrial practice management is

confronting the problem of identifying relevant factors and
deciding the importance they should assign to each of the
factors, findings of this research study unfolds an alternative
solution to this problem. As any model based on
measurement of a single criterion has inherent limitation,
factor model can be used for comprehensive evaluation of
different dimensions of a long-term investment and
eliminate biases and hubris. Consultancy houses can
conduct similar study and explore relevant factors and
their corresponding Eigen Values. Factor weights may be
subsequently computed on the basis of Eigen values of the
factors. An example of Factor Scoring Framework has been
shown in Appendix 1 of this paper. A hypothetical example
Extraction Method: Principal Component Analysis. of a project of car making has been used to show how Eigen
a. 4 components extracted. values can be used in Weighted Factor Scoring Model to
Four important variables that constitute first factor are arrive at well encompassed sound decision. Computations
strategy, competitors' modernization, future orientation in this regard have been shown in Table A in the Appendix.
and market competition. These are different measures of a
dimension called strategic perspective. Therefore, the first
( 68 )
Appendix 1:
Factor Scoring Framework: an Example
Say, an Indian car maker has adopted the project of introducing a small diesel car with the strategy of mass production
and cost reduction. The car maker has trained manpower for its internally designed new technology. The car is targeted
to lower middle class; hence, the projected NPV is estimated to be close to $10 million.
Depending on the result of the study made in this paper and Eigen Values of respective factors, final score as per
Weighted Factor Scoring Model will be as below in Table A:
Table A: Application of Weighted Factor Scoring Model- an Example
Decision: As the Total Weighted Factor Score 3.22 is more than the average 2.5, the project may be accepted. However,
if environment is counted as a constraint, [as it happens in Delhi, where new diesel car is not given registration], the
project may be forced to be dropped.
CONCLUSION budgeting decisions. Evidences from research findings

Using DCF methods and choosing projects with attractive indicate that while the corporate houses take decisions they
indices of value addition is no guarantee that all firms simultaneously strive for different goals with different levels
using DCF methods will definitely add value to of priority. Therefore, instead of relying simply on DCF
shareholders' wealth. Real life experiments don't provide methods, Weighted Factor Scoring Model that takes into
adequate evidence to add substance to this belief. In fact, account several factors into a systematic analysis can be
DCF methods are suffering from limitations, which are safely used to avoid biases and hubris associated with
mostly due to violation of basic accounting rules. methods based on measures of a single criterion. Empirical
Application of DCF grossly results in over-statement of gains methods may be scientifically used for identifying the
that misleads CFOs in accepting unprofitable projects. factors and determining the respective factor weights. This
Industry practice reveals that corporate houses assign is likely to result in application of a pragmatic approach to
considerable priority on strategic, technological, economic capital budgeting.
and environmental factors at the time of taking capital
( 69 )
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Dhruba Charan Hota

Prof. Dipen Roy
Assistant Professor,
Professor of Commerce
Department of Commerce,
University of North Bengal
Iswar Chandra Vidyasagar College,
Dist: Darjeeling, West Bengal
Belonia, South Tripura
E-mail: [email protected]
( 71 )
Performance Evaluation of Hybrid Mutual Fund

Schemes in India: An Empirical Study of ELSSs
Sanjay Kumar Patel and Pramod Kumar Verma
ABSTRACT
In a modern world, every investor wishes to a hybrid scheme that provides highest possible
returns, full safety of his money, and 100% tax deduction and no lock-in period. An Equity
Linked Savings Scheme (ELSS) is an open-ended Equity Mutual Fund that not only helps to
investors for saving the tax, but also gives an opportunity to grow the money and tax
exemptions. The present study measures the performance and growth pattern of ELSS of
selected banks with the help of selected parameters such as Return, Beta (?) value, R-Square,
Standard Deviation, Sharpe's Ratio, Risk Adjusted CAGR, Expense Ratio, etc. The study
concluded that the ELSS mutual funds are becoming the preferred choice of investment as it
capable to provide better returns than the other tax saving options.
In a modern world, every investor wishes to a hybrid scheme that provides highest
possible returns, full safety of his money, 100% tax deduction under Income Tax Act
1961 and no lock-in period. An Equity Linked Savings Scheme (ELSS)1 is an open-
ended Equity Mutual Fund that not only helps to investors for saving the tax, but also
gives an opportunity to grow the money. It qualifies for tax exemptions under section
(u/s) 80C of the Indian Income Tax Act, 1961. Equity-linked securities can be in the
form of a single stock, a group of stocks or an equity-based index, such as the S&P 500.
An ELSS is one type of hybrid mutual fund and its portfolio is a combination of range
of asset categories including equity, debt, gold and real estate. The maximum is the
input of equities, cumulative convertible preference shares and fully convertible
debentures and a bit of bonds of companies. Money market instruments contribute the
minimum portion of the total amount invested in any ELSS. The asset allocation is
almost preset and is in harmony with SEBI guidelines and also depending upon the tax
incentives and liquidity.
The main objective of All the ELSS is to provide opportunity to the investors to participate
in the growth of value of investments in equities & equity linked securities, over a
period of time, in addition to tax benefits. There are various ELS schemes provided
by the banks and financial institution to the investors due to the growing popularity of
hybrid mutual fund schemes. But in case of date of inception, SBI Magnum Tax Gain
Key words Fund, Canara Robeco Equity Tax Saver Fund and Baroda Pioneer ELSS 96 Fund are
the oldest schemes among ELS schemes. The present study generalized the results on
ELSS, NAV, AUM, Sharpe
the basis of the performance of these ELSS. A Brief characteristic of the selected ELS
Ratio, Risk Adjusted
schemes for the study have been given in Table 1.
CAGR, Beta Value,
Expense Ratio.
( 72 )
Sanjay Kumar Patel, Pramod Kumar Verma
Table 1. Key Features of the Selected Equity Linked relationship is the key factors of investment decision in
Saving Schemes mutual fund. However, growth and income is not as much
as only desire of investors after economic crisis 2008. The
Minim NAV as on 1st NAV as on 31st
Scheme Date of um April 2005 March 2015 investors want some other benefits like tax exemptions
Name Inception Invest rather than income and growth option. Therefore, recent
ment D G D G
studies proved that the schemes provide all these benefits
SBI Magnum
March are more popular than single benefits schemes and the
Tax Gain 500 12.35 8.34 45.61 114.32
1993
Scheme
hybrid features of scheme is the key factor of investment
Baroda
Pioneer March
500 12.31 12.31 31.95 31.95
decision. The present study confined with the hybrid
ELSS 96 1996
Fund
schemes of selected mutual fund.
Canara
Robeco March
500 6.81 6.81 25.94 47.52
Equity Tax 1993
Saver Fund OBJECTIVES OF THE STUDY
Source: www.moneycontrol.com
Note: G = growth option D = dividend option The main objective of the study is to evaluate and measure
the efficiency of selected ELS mutual funds schemes in the
REVIEW OF LITERATURE development of mutual fund industry with reference to
The early literatures concluded that income schemes of ELS schemes provided by SBI, Canara and BOB and try to
mutual fund performing well and expenses ratio play a find out which scheme is highly responsible in
table-2
main role in investment decision (table-2
table-2). But after 2003, development of mutual fund industry. For achieving main
growth and balanced schemes take place and risk-return objective, following sub-objectives has been formulated:
Table 2. Review of Literature
Literature Factors of Study Factors Affected the Investors Decision

Sharpe William F. Average risk and return Go od perform ance w as found to be asso ciated w ith
(1966) low expense ratio .
Sarkar & Majumadar Financial perform ance of clo se- Perform ance w as below average o f the fund
(1995) end ed gro w th fund s po ssessed high risk .
Jaydev. M., (1996) Returns, benchm ark co m parison, The schem es failed to p erform better than the
d iversification, selectivity & m ark et portfolio due to unsatisfactory
m ark et tim ing sk ills in Diversificatio n. The p erform ance d id not show any
p erfo rm ance of m utual fund signs of selectivity & tim ing skills.
Malhotra and McLeod Analysis o f mutual fund expenses Fund size, age, fund ’s sales charge, m aturity,
(1997) turno ver ratio and cash ratio .
Gupta, O.P. & Gupta, Investm ent perform ance of The sam p le fund s have not earned even equivalent
A. (2004) selected Ind ian m utual fund to risk free rate o f return as w ell as sam p le fund s
schem es are not ad equately d iversification.
Muthappan & The risk & return p erform ance o f Risk & return of m utual fund schemes are not in
Damodharan(2006) Ind ian Mutual fund schem es co nfo rm ity w ith their stated objectives.
Acharya & Sidana Classify 100 m utual fund s schem es Inconsistencies betw een the investm ent style and
(2007) by using cluster analysis the return o btained by the fund .
Debasish (2009) Measures perfo rmance of selected Frank lin Tem pleto n and UTI w ere the best
schem es of m utual fund s on risk perform ers, and Birla Sun Life, and LIC m utual
and return basis fund s show ed p oor perform ance d ue to risk
m anagem ent
Sondhi and Jain Mark et risk and investm ent op en-end ed o r clo se-end ed categories, size o f fund
(2010) p erfo rm ance of 36 m utual fund and the ow nership pattern is the significant
d eterm inants of the perfo rmance o f m utual fund
schem es.
Goel & Gupta (2014) Grow th, challenges and To m ak e add itio nal provisions for investm ent to
o pp ortunities in Mutual Fund co pe w ith mark et changing scenario .
Ind ustry
( 73 )
Performance Evaluation of Hybrid Mutual Fund Schemes in India: An Empirical Study of ELSSs
1) To review the Equity Linked Saving (ELS) Mutual Results and Findings of ELS Scheme
Fund Schemes in India.
The performance evaluation of selected ELS scheme of SBI,
2) To evaluate the performance of selected ELS schemes Baroda and Canara bank is measured on the basis of
of Public sector Bank Sponsored Mutual Funds. selected parameters such as Total Number and Assests
Under Management (AUM) of ELS Schemes, Average
3) To measure the efficiency of SBI, Canara and BOB
annual NAV, Total Return, Beta (â) of the Scheme, R-
sponsored ELS Mutual Fund schemes in terms of
Square of the Scheme, Standard Deviation, Sharpe’s
Risk and Returns.
Ratio, Compound Annual Growth Rate, Risk Adjusted
Hypotheses CAGR and Expense Ratio.
The study mainly measures the performance of ELSS in 1. Growth in the N Nuumb
mbeer and A
AUUM of Equ it
ity
quit y
mutual fund industry on the basis of risk and return Li
Linnked Savi ng Scheme
ving s:
mes:
whether ELSS performs efficiently or not. Consequently,
The performance of ELSS in the Indian mutual funds
the hypothesis being tested is:
industry can be measured on the basis of rise in the total
H 1: There is no significant difference between the number of ELSS schemes prevailing in the market during
performance of ELS Scheme of SBI, Canara and BOB the period of time. Table-3 shows the growth in number of
mutual fund. Equity Linked Saving Schemes floated in the market and
AUM in ELS scheme of mutual funds in India for the period
H2: There is no significance difference between growth
from 1st April 2005 up to 31st March 2015.
and dividend option of ELS schemes of mutual fund.
Table 3. ELS Schemes in India in terms of Number of
Schemes and AUM (2006-15)
RESEARCH METHODOLOGY
Open Close
Total AUM
Year Ended Ended
The present study is analytical in nature and based upon Schemes (Cr.)
Scheme Scheme
secondary source of data where in selected equity linked 2006 26 11 37 6589
saving schemes such as SBI Magnum Tax Gain Scheme, 2007 29 11 40 10211
Baroda Pioneer ELSS 96 Fund and Canara Robeco Equity 2008 30 12 42 16020
Tax Saver Fund have been covered. The performance of 2009 35 12 47 12427
selected ELS schemes are taken as Explanatory Variables. 2010 36 12 48 24066
2011 36 12 48 25569
The Standard Deviation, Regression, Beta, Sharpe Ratio,
2012 36 13 49 23644
Risk Adjusted CAGR, Expense Ratio and Analysis of
2013 36 14 50 22746
Variances (ANOVA) are used to evaluate the performance 2014 38 14 52 25547
of ELS schemes. The period of the study is from 2006 to 2015 39 16 55 39470
2015. Data has been collected from the financial statements Mean 34 13 47 20629
of the companies, SEBI and other reputed sources. SD 4 2 6 9563
CV 12 12 12 46
Significance of the Study Max 39 16 55 39470
Min 26 11 37 6589
Mutual fund is an emerging investment area. But common CAGR (%) 4 4 4 20
people have a lot of confusions in selecting the best mutual
fund for investment. Proper assessment of various mutual Source
Source- www.sebi.gov.in
fund performances and their comparison with other funds The table -3 shows an increasing number of schemes
helps retail investors for making fruitful investment during the study period in both types of schemes. In 2006,
decisions. Among various Mutual fund schemes, the the total number of scheme was 37 (11 close ended schemes
equity linked saving schemes ensures the minimum risks and 26 open ended schemes) and it was grow on its peak
with maximum returns to the investors. Thus, the study in the year 2015 at 55 schemes. The number of open ended
helps to investors for better investment decision. schemes has always been more than the number of
close ended of ELS schemes.
( 74 )
The average number of open ended scheme is 34 for the indicates that there is progressive trend with little
period with standard deviation of 4 schemes and positive fluctuation during study period in AUM of ELS scheme. It
variation in the growth of schemes (coefficient of was tremendous increase from March 2006 to March
variation= C.V.) of 12%. It is approximately two and half 2015 (from 6589 crores to 39470 crores).
times greater than the close ended scheme which is
averagely 13 schemes with standard deviation of 2
schemes and 12% variation in growth of the schemes.
However, the growth rate (CAGR) in close ended scheme
and open ended scheme are equal.
Figure-1 clearly shows that the number of open ended

schemes is quite high than close ended scheme in each
year. The trend line of open ended scheme is increasing
continuously from the beginning of the study period. It
indicates the investors trust toward the open ended ELS
scheme of mutual fund. On the basis of growth in the
number of ELS scheme, it can be concluded that the Source: compiled from data at: www.sebi.gov.in
performance open ended ELSS is much better than close 2. Av er
Aver
eraage Annu al Net Assets Value ((N
nnual NAV)
ended ELSS.
The Equity Link Saving funds have been compared on the
basis of their average annual NAVs and their growth over
and above the previous year values. Table-4 reveals that
the ELSS have seen a fluctuated growth in terms of their
NAV, after the worst effect of subprime crisis of the U.S in
the year 2008 which were caused due to excess lending
provided by reputed American banks to people with low
or poor credit worthiness. Firms like Bear Sterns, Lehman
Brothers, and Meryl Lynch had gone broken and many
others were finding it tremendously tricky to balance on
their feet. In order to strengthen their balance sheets,
these banks wrapped up positions in developing markets
which led to a losing swing in markets like India. A
Source: compiled from data at: www.sebi.gov.in simple case in point was the intraday 1400 points fall on
Assets under Management of ELSS the BSE in January 2008 that was brought about by City
Bank unwinding its position in many front line stocks in
The total value of assets that a mutual fund administers India. In these testing times all the ELSS gave negative
for itself and its customers is known as Assets Under growth.
Management or AUM. This value reflects position of the
specific fund in the mutual fund industry as a whole. The The highest average NAV in a year recorded in the period
amount of AUM is simple and the most prominent factor of study was 114.32 by SBI Tax Saver growth option in the
to determine the success or failure of a single fund or an year 2014-15. This scheme has also given highest average
industry. NAV of Rs. 59.19 for study period. While the least positive
average NAV in the year 2008-09 was of Rs.10.85 by Canara
Table -3 reveal that in case of ELSS, the AUM was Rs. Robeco Equity Tax Savings with lowest average NAV of
6,589 crore in 2006 and it was rapidly grow at Rs. 24,066 Rs.16.86 for study period. It is also found that initially
crore in 2010 and Rs. 39,470 crore in 2015. The CAGR of when the scheme is launched, the NAV of its growth
AUM in ELS scheme is 20% for the period. The average and dividend option remains more or less closer. But,
AUM is Rs 20,629 crore for period with variation (C.V.) of gradually huge differences between the two values can
46% in growth of ELSS. The rapid growth of AUM shows be seen which is due to intensive ploughing back of
the future prospect of mutual fund sector. The Figure -2 profits by growth options which leads to appreciation in
the value of investments.
( 75 )
Table 4. Comparative Table for Annual Average NAV of Selected Banks’ ELS Mutual Fund Schemes
(As on 31st March 2015)

Canara Robeco Equity Tax Saver
SBI Magnum Tax Gain Scheme Baroda Pioneer ELSS 96 Fund
Year Fund
D % G % D % G % D % G %
2005-06 24.71 36.70 18.29 18.29 12.05 12.05
2006-07 28.56 15.58 42.42 15.59 18.49 1.09 18.49 1.09 12.66 5.06 12.66 5.06
2007-08 34.50 20.80 51.07 20.39 22.87 23.69 22.87 23.69 15.76 24.49 15.76 24.49
2008-09 20.88 -39.48 30.91 -39.48 12.93 -43.46 12.93 -43.46 10.85 -31.15 10.85 -31.15
2009-10 35.46 69.83 57.80 86.99 24.23 87.39 24.23 87.39 19.21 77.05 23.33 115.02
2010-11 33.01 -6.91 60.07 3.93 24.74 2.10 24.74 2.10 18.21 -5.21 25.83 10.72
2011-12 32.05 -2.91 58.35 -2.86 21.73 -12.17 21.73 -12.17 17.29 -5.05 25.96 0.50
2012-13 30.88 -3.65 62.95 7.88 21.41 -1.47 21.41 -1.47 17.15 -0.81 27.89 7.43
2013-14 34.65 12.21 77.35 22.88 23.76 10.98 23.76 10.98 19.46 13.47 32.95 18.14
2014-15 45.61 31.63 114.32 47.80 31.95 34.47 31.95 34.47 25.94 33.30 47.52 44.22
Mean 32.03 59.19 22.04 22.04 16.86 23.48
SD 6.68 23.66 4.99 4.99 4.41 11.38
CV 20.85 39.98 22.64 22.64 26.15 48.47
Max 45.61 114.32 31.95 31.95 25.94 47.52
Min 20.88 30.91 12.93 12.93 10.85 10.85
CAGR
(%) 6.32 12.03 5.74 5.74 7.97 14.71
Source: w ww.se bi.go v.in
Note: G = growth option D = dividend option (% = % growth over the previous year NAV)
The highest average NAV of dividend option of ELS Table 5. Comparative Table of Total Return in ELS
scheme, for the study period, is Rs. 32.03 of SBI Magnum Schemes (%)
with variation (CV) of 20.85% (Table-4). The highest overall
growth rate (CAGR) of dividend option in Canara Robeco
is 7.97%. In the growth option of ELS scheme, the SBI Canara Robeco
SBI Magnum Tax Baroda Pioneer
Magnum quotes the highest average NAV as Rs. 59.19 Equity Tax Saver
Gain Scheme ELSS 96 Fund
Fund
with variation of approximately 40% but the highest overall Grow th Divid end Grow th Divid end Gro wth Divid end
growth rate (CAGR) in growth option of ELS scheme is 523.34 269.31 159.55 159.55 597.80 280.91
represent by Canara Robeco at14.71%. It reveals that the
Source: Calculated from the table-4 average annual value (2006-
performance of dividend option of SBI Magnum ELS
15)
scheme is better but in terms of NAV, Canara Robeco
ELSS is giving more consistent growth rates in comparison Table-5 shows that only growth option of Canara Robeco
to its counterparts. and SBI Magnum maintains the standards. The Canara
Robeco ELSS is giving highest returns to their investors of
1. Total Return
597.80% (growth option). Second maximum ELSS return
The total returns are the difference between the net asset is recorded by SBI Tax Savings growth option (523.34%).
value (NAV) of two separate dates divided by the NAV of In the dividend option, canara Robeco is the leading
the preceding date. It measures the overall profitability scheme. It can be concluded that SBI and Canara Robeco
performance of the schemes. It can be calculated as: ELSS, during last decade gives more return than benchmark
return in growth options. In nut shell, Canara Robeco ELSS
Total Return = (Closing NAV - Opening NAV) / Opening
is the more profitable scheme.
NAV)*100
The return values of S&P CNX 500 index (335.76%) has 2. Beta ( β ) of the Schemes
also been taken as a benchmark for more effective Beta is the measurement of volatility of the return with
interpretation of the results. fluctuation in the market return. It can be calculated as:-
( 76 )
Beta ( β ) = Covariance of Portfolio Return and Market Table 7. Comparative Table of R - Square value in ELS
Schemes (%)
Return/Variance of Market of Market Return
Beta ( β ) = Σxy / Σx
2
OR
Canara Robeco
Equity Tax Saver
Beta is a measure of risk which applied to a fund provides Gain Scheme ELSS 96 Fund
Fund
functional statistical information. It indicates a fund’s Gro w th Divid end Gro w th Divid end Gro w th Divid end
precedent price volatility relative to a particular stock 0.88 0.76 0.72 0.72 0.89 0.86
market index. A fund with a Beta greater than 1 is Source: Calculated from the table-4 average annual value (2006-
considered more volatile than the market and less than 1 15) and S&P CNX 500 index
means less volatile.
The highest R-square was noted of Canara Robeco ELSS
Table 6. Comparative Table of Beta (â) in ELS growth option with the value of 0.89 (table-7) which
Schemes (%) implies that 89% of the change in the NAV of ELS fund is
(As on 31st March 2015) due to the fluctuations in the market. The fund which is
most adequately diversified is the BOB Pioneer ELSS 96 in
Canara Robeco
SBI Magnum Tax Baroda Pioneer both options with an R-square of 0.72. The table also
Equity Tax Saver
Gain Scheme ELSS 96 Fund indicates that market condition is more a descriptive
Fund
Gro w th Divid end Gro wth Divid end Gro w th Divid end variable for the NAVs of ELSS. In a nutshell, it can be
1.326 0.347 0.253 0.253 0.642 0.244 said that on an average portfolios of all ELSS are effectively
Source: Calculated from the table-4 average annual value (2006- distributed. In the light of R- square it can be conclude that
15) BOB Pioneer ELSS 96 is less market sensitive in comparison
to other.
Table -6 reveals the Beta value of fund returns of the selected
ELSS schemes as on 31st March 2015 calculated on the 4. Stand
Standaard Devia
viattion
basis of average returns of the last ten years. The table
Standard deviation is the most used measure to estimate a
shows that the Beta value of SBI Magnum Tax Gain growth
fund’s risk than any other. In simple way, it measures
option at 1.326. It is maximum in line with the changes in how much a fund’s return varies around its mean or
the market. The fund which is least affected by the market average value. Thus, A higher value of standard
risk is BOB Pioneer ELSS. As per the risk measure is
deviations means more deviation from its average rate
concerned, it can be concluded that SBI ELSS most
of return. The table-8 reveals the standard deviations of
volatile towards the market fluctuation as compared to fund returns of all the selected ELSS as on 31st March 2015
their counterpart growth options and Baroda ELSS is less which have been calculated by using the daily return
risky.
values of the schemes.
3. R-Squ
R-Squ are of th
-Squa e Scheme
the emess Table 8. Comparative Table of Standard Deviation
R-square measures a fund’s movements against its value in ELS Schemes (%)
particular benchmark index on a scale. Here, R-square (As on 31st March 2015)
means that portion of change in NAV which is affected by Canara Robeco
Equity Tax Saver
the change in the market. The ‘Market’ refers to BSE Index. Gain Scheme ELSS 96 Fund
Fund
In Table-6, R-square values of the selected ELSS has been Gro w th Divid e nd Grow th Divid e nd Grow th Divid end
given as on 31st March 2015 which have been calculate 23.66 6.68 4.99 4.99 11.38 4.41
by using the daily returns of the last ten years. Here r2 has Source: Calculated from the table-4 average annual value (2006-
been calculated between portfolio return and Benchmark 15)
S&P CNX 500 index return. It is clear from the table 8 that the highest Standard
Deviation (S.D) is represented by SBI Magnum Tax Gain
scheme (23.66 for growth option) followed by Canara
Robeco ELSS (11.38 for growth option). It means that this
fund gives the most unpredictable returns. The Baroda
ELSS shows lowest deviation in its return. Therefore, it
( 77 )
can be concluded that growth option ELSS are more Table -10 indicates that BOB Pioneer ELSS 96 is giving
volatile and random as compared to dividend option ELSS least CAGR of 5.74% in both growth and dividend options,
in terms of their returns and BOB Pioneer ELSS 96 is most which is much lower than benchmark return and from the
consistent performer. least CAGR of others. Canara Robeco growth option being
the exceptionally good performer is given a positive CAGR
5. Sh
Shaarpe’s Ra
Rattio
(14.71%) i.e. it can be assumed that it is grown with every
Sharpe’s Ratio model evaluates funds on the basis of compounding cycle. This growth is even higher than the
reward per unit of total risk. A high and positive Sharpe’s growth experienced by our benchmark index (12.22%).
ratio is an indication of a finer risk adjusted performance. Hence, it can be concluded that the Equity Linked Saving
Here the Sharpe’s Ratios have been calculated on the basis Schemes of Canara Robeco provides higher growth
of average portfolio return, Standard Deviation of the fund opportunity than other selected bank.
in the last decade and 91 day Treasury Bill return (risk free
7. Expense Ra
Rattio
rate of return). The table-9 shows the Sharpe’s ratios of all
the selected ELSS as on 31st March 2015 along with The bank is done various expenses to comply with and
Sharpe’s ratio of the S&P CNX 500 index as the benchmark control of any mutual fund schemes. All such expenses
for more effective analysis of the data. and charges can be evaluated under a single category
called expense ratio. Expenses are the decision making
Table 9. Comparative Table of Sharpe’s Ratio in ELS
measure of how superior the returns of a mutual fund will
Schemes (%)
be. In Table 11, the average Expense Ratios of the selected
tax saver schemes is given on the basis of the data for the
S&P Canara Robeco
SBI Magnum Tax Baroda Pioneer period starting from 1st April 2005 up to 31st March 2015.
CNX Equity Tax Saver
500 Fund Higher ratio shows the inefficiency in management of cost
Gro w th Dividend Gro w th Divid end Gro wth Divid end
3.29 2.21 3.76 3.03 3.03 1.45 2.25 and lower ratio shows efficiency in management of
operating cost of funds.
Source: Calculated from the table-4 average annual value
(2006-15) Table-11: Comparative Table of Expense Ratio of ELS
Scheme (%)
The table-9 clearly indicates that the ratio of all the schemes
is less than the benchmark index. All the funds have at (As on 31st March 2015)
most given better outcomes than the market. SBI Magnum
SBI Canara
Tax Gain fund (3.76 dividend option) can be adjudged as Baroda
Scheme Magnum Robeco Equity
Pioneer ELSS
the best amongst selected fund houses. So it can be Name Tax Gain Tax Saver
96 Fund
concluded that on an average SBI Magnum Tax Gain is Scheme Fund
2005-06 2.14 1.27 1.25
managed to provide superior domino effects as 2006-07 1.89 1.30 1.15
compared to other ELSS. 2007-08 2.5 1.69 2.50
2008-09 2.5 2.50 2.50
6. Co
Commpoun
undd An nu
Annu al Grow
nual Ratte
owtth Ra 2009-10 1.78 2.50 2.38
2010-11 1.81 2.50 2.33
Compound Annual Growth Rate is the year-over-year 2011-12 1.82 2.50 2.29
growth rate of an investment is for a specified period of 2012-13 2.21 3.22 2.65
time. It is an improved version of the total percentage 2013-14 2.28 3.02 2.59
growth rate. Table-10 shows the CAGR of benchmark and 2014-15 2.26 2.88 2.63
Average 2.12 2.34 2.23
selected ELSS, calculated on the basis of average annual SD 0.28 0.69 0.56
return of the year 2005-2006 and 2014-2015. CV 13.13 29.49 24.93
Table 10. Comparative Table of CAGR in ELS Maximum 2.50 3.22 2.65
Schemes (%) Minimum 1.78 1.27 1.15
CAGR 0.55 8.53 7.72
S&P Canara Robeco
SBI Magnum Tax Baroda Pioneer Source: www.valueresearchonline.com
CNX Equity Tax Saver
500 Fund
Gro w th Divid end Grow th Divid end Gro w th Divid e nd The lowest expense ratio of ELS schemes during the study
12.22 12.03 6.32 5.74 5.74 14.71 7.97 period is presented by Robeco Equity Diversified Fund. It
Source: Calculated from the table-4 average annual value (2006-15) spent only 1.15% of its returns earned on operational
( 78 )
activities in a specific year (2006-07). The maximum money, and 100% tax deduction under income tax and no
average expense ratio position is held by Baroda lock-in period. The parameters under which ELSS have
Pioneer Growth Fund (3.22%) which indicates Baroda recorded better figures are average annual NAV,
Pioneer is not able to control its operational expenses. percentage growth in NAV, total Return, beta, R –
Square, standard deviation, expenses ratio and adjusted
The mean of overall expense ratio for the period is 2.12%
CAGR. On the basis of ELSS taken as the representative
with variation of 13.13% of SBI’s ELS scheme, 2.34% with
sample for the Indian mutual funds industry, it can be
variation of 29.49% of Baroda,s ELS scheme and 2.23%
depict that mutual funds are growing fast with
with variation of 24.93% of Canara’s Scheme (table 6.30).
fundamental shift from single benefits schemes to multiple
Therefore, it can be concluded that on an average all three
benefits schemes. Therefore, ELSS becoming the preferred
are almost similar, but SBI Magnum Tax Gain is better in
choice of investment for the literate working class as
expenses performer. SBI Magnum Tax Gain scheme is
that are capable of providing better returns with
found the most misers towards the operational expenses
minimum risk, no lock-in-period and tax advantage. There
which included items like fund manager’s fee, audit fee
is continues growth in total no. of ELSS schemes available
etc. during the study period.
in the market and their AUM has also shows increasing
8. Statistical testing of difference between average NAVs trend.
of selected ELSS
The performance of SBI Magnum Tax Gain fund is better
The data for the ELSS was tested separately for growth in case of NAV, Sharpe’s Ratio and operational expenses
and dividend option. To begin with the choice of the amongst selected fund houses. But, the BOB Pioneer ELSS
three schemes has been justified by trying to know 96 fund shows the lowest beta value (less risky), lowest R-
whether there is significant difference between the average square (less market sensitive) and lowest Standard
NAVs of their ELSS or not. For this ANOVA was applied Deviation (most consistent performer) in comparison to
to test the hypothesis: other. However, Canara Robeco ELSS gives more return
than benchmark return and provides higher growth
Table – 12: ANOVA Results for Mean of NAVs of ELS
opportunity (CAGR) than other selected banks. Thus,
Schemes
Investors can park their funds in these ELS schemes as per
Sum of
df
Mean
F Sig.
the suited objectives.
Squares Square
Between
Groups 8859.944 2 4429.972 18.605 .0008
GROWTH
Option Within
Groups
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Dr. Sanjay Kumar Patel Pramod Kumar Verma

Assistant Professor Research-scholar
Department of Commerce, Central University of Faculty of Commerce, Banaras Hindu University
Rajasthan Varanasi
Kishangarh, Ajmer
E-mail : [email protected]
( 80 )
Modeling for Determinants of Mutual Fund Family

Performance: Marked Remission to Indian Mutual
Fund Industry
ABSTRACT
Indian mutual fund industry is experiencing tremendous growth, which is the outcome of
infrastructural expansion and advancement in India. This paper contributes to the mutual
fund performance literature by bridging the gap of an empirical research based on
determinants of mutual fund family as a predictor of mutual fundperformance in the context
of Indian mutual fund industry.In preference to treating mutual fund as an entirely
independent entity, it has been treated as a larger group, the mutual fund family. It has been
witnessed that creating multiple mutual funds is somehow inefficient. So, to overcome the
inadequacy associated with single stand alone funds, fund family concept has been launched.
This paper encapsulates the central line of reasoning of mutual fund separation theorem and
with this foundation it presents the influential factors which contour the fortune of a fund
family and its associated funds in the Indian market in the form of an analytical graphical
model which represents a set of variables and their interrelationships on the basis of structured
questionnaire based on Inductive approach and Likert scale method of responses. Along with
this, effect of demographic variables on investor's decision have also been analyzed.A sample
size of 200 based on stratified sampling technique has been considered, which have been
bifurcated as 100 mutual fund professionals and 100 mutual fund investors.PCA Method of
Exploratory Factor analysis has been used for data analysis. Sampling frame considered for
data collection are the mutual fund professionals along with mutual fund investors from
Delhi/ NCR.
Results of the study reveals that compared to stand alone funds, a fund family has a greater
flexibility in reallocating its human and other resources in response to market opportunities
and its performance is mainly affected by factors like fund family returns, market coverage,
economies and management structure of fund family.Along with this demographic variables
also play a very crucial part in framing the psyche of an investor about any investment
avenue, especially mutual funds. As mutual funds are in an embroyonic stage in India as
compared to global market.
INTRODUCTION
Well recognized Portfolio Theory by Harry Markowitz bestowed conduit for mutual
fund separation theorem.It is one of the pearls of Mathematical Finance. This theorem
states that an investor’s optimal portfolio can be build by possessing certain mutual
funds in suitable ratios.Benefits of following mutual fund theorem are that on the
Key words
fulfillment of relevant preconditions it becomes easier for the investor to purchase a
Mutual funds, Fund smaller number of mutual funds than to purchase larger number of individual
Family, Performance, assets.Along with this, collaboratively, on theortetical and practical aspect, mutual
Outsourcing, brand value, fund portfolios can be examined in a mean-variance scaffold, with the assumption that
economies, management every investor is holding a minimum variance portfolio. This theorem works as a manual
structure. for mutual fund family managers and sponsors.With this postulation, fund families
strive to offer those mutual funds to the market which serve these critical prerequisites
to attract higher market pie of investors.
( 81 )
Modeling for Determinants of Mutual Fund Family Performance: Marked Remission to Indian Mutual Fund Industry
“When we consider the mutual fund industry over the Nanda, Narayanan and Warther (2000), have concluded
past decade, one of the most notable developments is the that mutual fund managers are potentially “skillfully
enormous growth of funds that are operated by fund conversant”. Cosidering the same findings as backdrop
families”. (Verbeek and Huij, 2007). as mutual fund managers are employees of “mutual fund
families” a priori emphasis is demanded by them.
A mutual fund family is a group of funds managed by the
Consequently, this paper does not impart a competing
same management company. Study done by Nanda et.al.
theory to the above literature, except, a complementary
(2004) revealed that more than 80% of the U.S. mutual
one. In particular, this paper seeks to explore the
funds belong to a family. Rationale for this has several
determinants related to performance of mutual fund family.
reasons in backdrop in the same study, researchers
In equilibrium, most of the the mutual fund families
mentioned that a family’s brand value helps to comfort
proposes to trade portfolios which are useful to the subset
investors about the selection and monitoring of investment
of the population of securities. The outcome of this
managers. Apart from these, economies of scale in
investigation is a theory that provides an explanation for
promotion, servicing, and distribution along with
why fund families exist and why investors prefer to invest
centralized decision making play an important role in
in funds attached with some fund family.
enhancing the value of fund family.
Literal connotation of the word ‘family’ explains it as,”Two
Conventional acumen also holds that two brains are better
or more people who share similar aspirations and values,
than one. In present scenario, similar perception holds
have long term stanchness towards one another”. It makes
true in context of Indian mutual funds industry. Over the
this expression implicit that funds would be more similar
preceding several years, many mutual fund companies
inside the fund families as compared to outside fund
have transformed their funds earlier run by a single
families. There are several grounds for this believe as a
manager to team status. Contribution of team managed
matter of fact portfolio managers within families have
equity funds in US augmented between 1994 and 2003
access to common research analysis reports produced by
from 5% to about 46%. Considering the facts and figures
either the internal or external research agencies, many
related to year 2015-16, India has miserable condition if
families also have a prearranged investment style and top
ratio among mutual fund investment and GDP are
of it, a family’s rapport with an investment brokerage firm
compared, it is mere 7% in India, where as 114 % in
also have affects on their stock holdings.
Australia, 91% in USA, 51% in UK.The mutual fund
industry is superlatively suited to scrutinize the A glimpse on the growth of present Indian mutual industry
evaluations done by teams and comparing the impact of will throw some light on the importance of mutual fund
the same over retail investor’s investment psychology, as family. AUM of Indian mutual fund industry has increased
it encompasses a real world setting. from Rs.12.65 trillion in June 2015 to Rs. 14.90 trillion in
June 2016.Which shows a growth of 18% in assets.
Lot of empirical research papers have mentioned that the
Individual investors presently hold a lower share of
overabundance of accessible financial institutions reveal
industry’s assets, i.e. 45.6% in June 2016 but on contrary,
a wide variety of trading behaviours, many of them are
value of assets held by individual investors in mutual
practically tough to merge with existing theories. Gruber
funds increased from Rs. 5.72 lakh Cr in June 2015 to Rs.
(1996) mentioned in his research that most models predict
6.80 lakh Cr in June 2016, an absolute increase of 18.95%.
that investors will make only a small investment in
Institutional investors have occupied greater pie in the
passively managed funds but in realism thousands of
market share with 54.4% of the assets. Out of 45.6% share
passively managed funds exist in the market. As
of individual investors, 85% of funds have gone into Equity
Sharpe(1992) and Brown and Goetzmann(1997)
oriented schemes whereas liquid and money markets have
demonstrate that mutual funds exploit a huge assortment
been dominantly ruled by institutional investors with 92%
of trading tactics. This paper tries to bridge the existing
share.
theory and current mutual fund investor’s opinion
regarding the same. Discussion pertaining to mutual fund Rationale of the study
family mandatorily involves fund managers as they hold In this research work, mutual fund performance has been
a very vital position in the organization. Majority papers viewed from a distinctive outlook as compared to most of
on mutual funds like Allen and Gorton (1993), Dow and the existing literature. In preference to treating mutual fund
Gorton (1997), Ou-Yang ( 1997), Das and Sundaram (2000),
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as an entirely independent entity, it has been treated as a Paper Organization

larger group, the mutual fund family. It has been witnessed
The rest of the paper proceeds as follows: Section II: Throws
that creating multiple mutual funds is somehow inefficient.
some light on the review of concerned literature. Section
So, to overcome the inadequacy associated with single
III: Notifies about the data set considered with the reasons
stand alone funds, fund family concept has been launched.
of various selections, type of research conducted, various
This concept helps the investors in opting for the type of
research tools applied etc. Section IV: Is concerned with
asset class investor wants to enter in his portfolio. A large
the data analysis of primary data of mutual fund investors
fund family offers various benefits to its investors like one
based on several research tools. Section V: Briefs about the
stop shopping for their fund, consolidated fund investment
results of evaluationsand model based on data analysis
statement, easy fund transfer within the fund family etc.
and finally, Section VI: Concludes the paper.
But retail investor neither has exposure towards these
benefits nor has awareness.Precisely, lack of clarity
regarding factors affecting mutual fund family
REVIEW OF LITERATURE
characteristics is an imperative basis of erroneous
investment decisions made by the investors. This study Analysis of mutual fund performance is not a novel theme
examines from retail invetors perspective, whether these for mutual fund investors and managers but which way
fund family characteristics influences the return a fund to go is a big dilemma for majority of present investors and
generates and fulfills the need of a more realistic and potential investors in today’s scenario. As variety of
elaborated performance evaluation model along with calculative mechanisms, models exist in the concerned
analyzing the effect of demographic variables on investor’s area and most importantly, every fund manager and every
decision. AMC has a different opinion or strategy regarding the
performance evaluation measures to be considered. Due
Concluding, India is in the initial stages, of a revolution in
to uncommon variables being considered, the evaluation
financial market that has already been seen by U.S., U.K.
process becomes incomparable at times. Presently, the
and other developed markets. The U.S. boasts of an asset
literature has identified the requirement of more
base that is much higher than its bank deposits. In India,
understanding about the fund families, impact of their
mutual fund assets are not even 10% of the bank deposits,
decisions, management structures etc.
but this scenario has started showing changes gradually.
But, reality situation says that banking as financial Most mutual funds are members of fund families.
intermediaries cannot be flouted but yes, it’s certain that Compared to stand alone funds, a family has greater
mutual funds are going to transform the manner in which flexibility in reallocating its human and other resources in
banks do businesses. response to market opportunities. Despite the prevalence
of the family organization, little research has been done
on the consequences or importance of family membership.
OBJECTIVES OF THE STUDY The literature has, for the most part, treated funds as
though they were stand alone entities. The concerned
The various contemplations beneath the performance
industry’s leading firms manage funds in the form of fund
evaluation of mutual funds is a matter of concern to the
family and are in charge of two-thirds of the industry’s
fund managers as well as the investors whether retail or
mutual fund assets. Although, certainly these fund groups
institutional, researchers alike. The present paper attempts
don’t pursue similar management practices, they don’t
to answer following questions relating to mutual fund
have identical management tenure or investment
performance:
performances. Morningstar researchers revealed in a study
1) To determine the effecting variables of mutual fund that fund families differ in all the above mentioned
family as determinants of mutual fund performance. attributes along with the fees charged by them. The same
research entails various effecting factors like corporate
2) To determine the impact of demographic variables
culture, management structure, portfolio incentives etc. In
on the investment decisions of mutual fund investors.
addition to all the above mentioned advantages, results of
3) Topropose amodel for performance evaluation of research done by Martin and Clifton (2004) indicates that
mutual funds based solitarily on fund family curbing mutual fund investments to one family has a
performance determinants. detrimental effect on investor’s risk.
( 83 )
In this section of literature review, we explore the effect of flows. On the same track, Langer (1983) suggests that when
fund size on performance of an active mutual fund. For investment preferences are a result of individual choices,
this matter, a superior, comprehensible outlook towards there is more attachment to the preferences of past which
economies of scale in this industry is desirous from play a decisive role in making today’s investment
investors as well as practitioner’s perspective. As research decisions. This phenomenon is in harmony with Cognitive
done by Becker and Vaughn (2001) discussed the plausible Dissonance theory of Festinger (1957). While investigating,
effects of diseconomies of scale from the perspective of De Bondt and Thaler (1985) found that investor behavior
practitioners. As they need to know when to close funds, is the basis of investor reaction where investors over
amount of compensation to be paid to managers. But here emphasize on the fund’s present or past performance and
comes a fiddly state of affairs in focus as managers usually on its basis forms an opinion about its future performance.
start growing size of funds at the expense of gaining higher Ippolito (1992) also gave the same findings in context of
returns. Till today, even though fund size has a past performance as a determinant of fund family’s
considerable impact on fund performance, there is little performance.
literature accessible. Also there are conflicting views with
In an article by Silverblatt (2013),Jack Bogle, founder of
regard to the fund size. Some favor large fund size pointing
‘The Vanguard Group’, revealed that 7% of the mutual
towards its benefits like more research resources, lower
funds died every year between 2001 and 2012. But irony of
expense ratio (Friedman and Wiles (1998), Hong, Lim and
market shows that even though funds are dying at a hasty
Stein (2000), Chen, Hong and Stein (2002)). Others consider
pace but they are being born at an even quicker clip. In the
its flipside as large asset base erodes fund performance
same context Massa (2003) modeled a process that leads
(Lowenstein (1997), Grinblatt and Titman (1989), Perold
to market segmentation and fund proliferation and which
and Solomon (1991)). Research of Joseph et.al. (2004)
is based on spillover effect. The concept of brand
showed that effect of fund size can be more prominently
proliferation in the mutual fund industry has gone
shown on small cap funds. Along with it, study also
unnoticed in the financial literature. Khorana and Servaes
emphasized that liquidity is an important reason behind
(1999) pragmatically analyzed the determinants of mutual
performance erosion due to fund size. A new-fangled term
fund performance and novel contribution of this paper
with respect to mutual fund return is “spillover effects”
was developing a model on the basis of fund proliferation
between funds in a family-e.g.,a situation when a good
and category proliferation.According to Lyons H. (2015)
performance by one fund augments cash inflow to other
approximately 50 percent of American households are
funds in the family as well and it has been strongly
direct stakeholders in the U.S. securities markets due to
supported by Khorana and Servaes (1999).It has also been
mutual funds proliferation.
observed that many times fund families actively publicize
the performance of their best performing funds to endorse For investing in mutual funds predecessor of mutual fund
perceptiveness and resultantly greater cash inflows. family is the fund manager, who will be the face of AMC
Ippolito (1992), Gruber (1996), Goetzmann and Peles for the investor and they are like the rock stars of the
(1997), Chevalier and Ellison (1997), and Sirri and Tufano financial world. The greatest mutual fund managers
(1998) revealed that mutual fund investors reward good produce long term, market beating returns and a deserved
performers more as compare to penalizing poor performers. capital appreciation to their investors. Here a brief mention
As a resultant, some fund families, especially with lower of Benjamin Graham, Sir John Templeton etc is inevitable
ability, try to generate more and more star funds to dole as they have been the greatest fund managers ever in every
out their share even to low performers. Ivkovic (2001) sense. Khorana (1996) scrutinized a sample of 339 US
documents a positive spillover effect amongst fund family mutual funds which encountered manager turnover and
members. Zhao(2002) also supported the fact that spillover found that the replacement of a competent fund manager
effects have an imperative effect on fund family’s decision on an average leads to two years of noteworthy
to close a fund to novel investors. underperformance. Dangl et.al (2008), have developed a
model for the probable rationale for the replacement of
Past performance related to a fund has a persisting effects.
portfolio managers. Through this study it was revealed
Spritz (1970), Smith (1978), Kane et.al. (1991), and Patel
that lower past performance, and reduced manager tenure
et.al. (1994) reported a positive association amongst past
are the vital reasons. The same factors have also been
performance of the fund family and its current money
revealed in their studies by Khorana (1996) and Chevalier
( 84 )
and Ellison (1999). Findings of various studies on extensive and complex tasks. While analyzing the
replacement of fund managers suggests that if good consequences of fund management structure on mutual
performing managers are replaced by low performing fund performance, astonishing revelations have come
managers it leads to decline in returns and vice-versa. forward. Considering the significant position of
These results maintain that manager turnover is a crucial management structure of a fund family, it has been
reason for the non existence of long term mutual fund researched that team management has a downbeat impact
performance persistence. on fund performance. The benefits derived with these
structures are overcompensated by additional costs and
There are numerous costs borne by a fund house with
team specific in competencies or inefficiencies.Fund
relation to mutual fund. Out of these, some costs are fixed
investors should contemplate fund management structure
while some are variable. Mammoth of costs occur when a
if it has an effect on managerial behavior and fund
fund house wants to start up a new fund offer in which
performance. (Chevalier& Ellison, 1999b). Various
previously they have not dealt with. Here costs could
psychological experiments as done by Adams &
include hiring new portfolio managers, obtaining new
Ferreira(2003) and Cooper & Kagel (2004) have revealed
sources of research, developing new risk evaluation and
that choices made by individuals vary from choices made
monitoring processes etc., which makes average cost of
by teams in diverse dimensions, especially, about their
fund investment very high. Nevertheless, if that task has
riskiness, extremity and quality. Study done by Bar et al.
been outsourced to an asset manager who already have
(2005) have shown that investment style of team managed
processes and people in place servicing existing portfolios
funds have less extreme style as compared to single
could result in economies of scale for the fund house, if
managed funds. Team managed funds are usually large
hired as a sub-advisor. As some very well known asset
and they operate in segments.
managers like Tom Marsico, Mario Gabelli or Bill Miller,
were not affordable by most of the fund houses to be hired Mutual funds as an investment avenue serves as a tool for
as employees but if a sub-advisory arrangement has been risk mitigation, which implicitly depends upon the fund
created, it has always been beneficial. As in these cases, managers risk appetite. Regarding a fund family’s
sub-advisor has been endowing the fund with his own management behavior it has been researched by several
brand value, management services, increased profitability researchers and concluded that decisions made by
of the fund etc. and all as a package higher what the mutual individuals and teams differ in a noteworthy manner.
fund family could achieve on its own. Along with it, Management teams takes less overall risk as judged against
location of fund family is also a crucial basis of outsourcing single managers. On the other hand, there are studies
as fund families find it economical to hire sub advisors which favor the extremist risk taking behavior as a result
than to pay hefty amounts to in-house portfolio managers of group decisions.(Myers and Lamm, (1976) Kogan and
to inveigle them to live in that locale. Outsourcing process Wallch, (1965) Kahneman and Tversky, (1979)). Even
has been advocated rational by various researchers like though management teams of fund families take riskier
Grinblatt and Titman (1989), Golec (1992), Roll (1992), Das decisions but Bone et al. (1999), Blinder and Morgan (2001),
and Sundaram (1998a, b and 2002),Palomino and Prat Rockenbach and Matauschek (2001), Cooper and Kagel
(2003) and, Li and Tiwari (2009) (2004) have proven in their studies that these teams perform
rational and better through team deliberation (Shaw 1932;
Several researches on fund management structure have
Sharpe 1981), and access to wider knowledge resources
specified that fund management selection is a strategic
and capabilities (Pelled et. al. 1999).
decision, usually made uniformly for all the funds by the
top management of the fund family. In context of According to the findings of the research conducted by
performance of teams versus individual funds, literature Sundar and V(1998), brand image of a fund family and
offers diverse substantiations. But the results of majority returns of a fund are the principal influential factors while
of studies reveal that teams act more rational and they investing in mutual funds. On the same lines, Chakarabarti
perform better. (Bone et al (1999), Blinder & Morgan, (2000), and Rungta (2000) gave due emphasis to the relevance of
Rockenbach and Matauschek, (2001), Cooper and Kagel brand image of a fund family in determining its competitive
(2004)). Studies by Chevallier & Ellison (1999b), Ding & position. Their study revealed that though brand image is
Wermers (2005) concluded that effective and strong not a quantifiable performance measure but it influences
management structures are primarily employed for more investor’s perception. According to the study conducted
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by Gupta (1988), in most cases brand image of a product management structure of the fund, fund family scheme
or fund family implicitly helps the investor to know its characteristics etc. have been included.These 12 factors
product or return features and ultimately their selection have been treated as predictors of effect on the performance
criteria. of mutual fund family.
Verbatim sense of the term ‘Performance Persistence’ is Table 1. Determinants of mutual fund family
the unvarying returns or performance of a product or performance
security and the extent to which past performances of the
1. Fund Fam ily Size
security plays a part in predictingits future
performance.Sharpe (1966) study supported the 2. Managem ent Structure of Fund
performance persistence concept in mutual funds. Similar 3. Fund Fam ily Schem e Characteristics.
study was done by Carhart(1997), Chen et.al (2000) and 4. Brand value of a fund family nam e
Rao (2001) with an additional perspective of time duration, 5. Outso urcing of p ortfolio m anagement
services
emphasizing on the short term period performance
6. Risk Strategies
persistence. Additionally, researchers like Elton et.al
7. Fund Ad visors tenure & qualifications
(1996), and Drooms and Walker (2001) extended this time
8. Sp illo ver effects
period up to three years but not beyond that. But studies
9. Fund Pro liferation
like those of Jan and Hung (2004) emphasized that
10. Past Perform ance
performance persistence should not be time bound. If it
11. Perfo rm ance Persistence
exists in short run, it should also exist in the long run.
12. Fund m anager turno ver
Research done by Grinblatt and Titman (1993) supported
performance persistence and inveterate the existence of DATA SET
positive as well as negative persistence. Whereas Carhart
(1997) found the evidences of only negative persistence in Primary Data and Sample Size
mutual funds for long term. On an exactly dissimilar note, Primary data has been collected from fund managers,
studies of James and Douglas (1998) and Jan and Hung assistant fund managers and mutual fund brokers of
(2003) revealed that there is no relationship among funds’ various fund houseslocated in Delhi/ NCR region and
past and future performances. handling various mutual fund schemes. The Indian
Characteristics of a mutual fund scheme have a Mutual Fund Industry has 28 Fund Houses. In the present
considerable impact on mutual fund investment decisions. research the population size can not be very large, therefore
There is a need for the mutual fund companies in India to efforts were made to get the data from the
have deeper indulgence and awareness of the various Universe.References on approval of suitable sample size
characteristic driving forces and should be given due for factor analysis differconsiderably (Fabrigar et.al., 1999).
importance at the phase of designing and development of Some have recommended a minimum of sample size of
schemes of investment in mutual funds. (Sindhu and 300, but in realism, in case of circumstances with small
Kumar, 2013) number of variables a sample size of even 100 is adequate.
A sample of 100 mutual fund professional along with 100
mutual fund investors have been taken for data analysis.
CONCLUSION Data Collection Method
Wrapping up this section, it can be concluded that there The primary data was collected by a personally
are abundant variables which shape the performance of administered questionnaire to the fund managers,
mutual fund family. Considering the constraint of time assistant fund managersand mutual fund brokers.The
proximity for this present study, Table 1 illustrates the reason for selecting this data collection tool was to ensure
major factors affecting the performance of mutual fund that the correct information is collected from the
family, which have come out as the result of extensive respondents and if there are any doubts the same can be
literature review and can be taken into account for data sorted out on the spot. Also it saves time and the response
analysis, for framing model for performance evaluation of rate is too high. The questionnaire was only in English
mutual fund family. Factors like fund family size, Language. The survey instrument comprised of three
( 86 )
sections. The first section included a respondent and is frequently measured using a statistic known as
instruction sheet, which gave a brief to all the respondents Cronbach’s Alpha. Cronbach’s alpha is a measure of
about the purpose of the study and what is expected from internal consistency which means the degree to which
them through this survey. The second section had various items in scale measure the same underlying attribute. This
statements regarding determinants of fund family test should range between 0 and 1 with higher values
performance based on the variables identified with the indicating higher levels of reliability. Nunnally (1978)
help of literature review. This section used afive-point advocates a minimum of .7. Nevertheless, alpha values
Likert scale: 1 = not at all important; 5 = extremely increase with scale length so checking for
important. The third and the final section collected an unidimensionality via exploratory factor analysis is the
elaborated demographic data of the respondents. Data basic here. In tablevalue of Cronbach’s alpha is .843, which
collection took 4 months time- ending June 25, 2016. is well above Nunnally’s threshold.
Research Tools Table 2. Sample Adequacy and Reliability Statistics

Measure For Sample Adequacy Value
Descriptive (Frequency, Cross Tab) along with Principal Kaiser-Meye r-Olk in Measure o f Sam pling Ad eq uacy. .757
component analysis has been used as it allows the Bartlett’s Te st o f Sphe ricity 555.940
App rox. Chi Square 66
researcher to determine the nature and number of latent Df .000
variables underlying a set of items. Significance
Reliability Statistics Value
Cro nbach's Alpha .843
Cro nbach's Alpha Based o n Standardize d Item s .846
DATA ANALYSIS N o f Ite m s 12
While performing data analysis foremost attention needs Next assessment relates to the number of factors to be
to be given to Correlation Matrix to make certain that extracted. The number of dimensions selected can be based
correlation coefficients are greater than .3 in magnitude. If on a variety of criteria and it is widely recommended a
correlation matrix table does not show major correlations variety of approaches should be taken into account while
greater than .3, it signifies that factor analysis is not an making decision. (Fabrigar et. al., 1999). In this study, two
appropriate data analysis tool in the concerned case. But, decision criteria have been considered. The first and most
in this study, major correlations are greater than .3 which accepted method for deciding on the retention of factors is
tentatively suggests that factor analysis is an appropriate Kaiser’s Eigen value greater than 1 criterion (Fabrigar et
tool here. al., 1999). This rule specifies all factors greater than one
should be kept for interpretation. Along with this,
Second most important check needs to be done about the Cumulative Variance Analysis with a threshold of
adequacy of sample size. For this, Kaiser –Meyer-Olkin minimum 60% as approved for social sciences, has been
Measure of Sampling Adequacy (KMO) has been considered for decision making. (Hair et al, 2006).
calculated and it shows the value of .757, which is quite Considering both these thresholds 4 factors have been
higher than minimum acceptable value.6. Along with this extracted as for these variables Eigen values are more than
Barlett’s test of Sphericity has also been calculated. This 1 and cumulative variance value is 72.762%. Next stage
test compares the observed correlation matrix to the identity relates to the interpretation of factors. These variables with
matrix and its minimum acceptable value (p value) is less higher loadings are used to identify the nature of the
than.5. Our data shows test is significant (p=.000) (Insert underlying latent variable represented by each factor. Total
Table 2) factors have been clubbed into 4 factors and variables
As in finance, pre defined scales are not very common and included in these factors have been shown in the table.
are not easily available. So, a scale hasbeen framed on the Along with this demographic profile of investors also
basis of references from literature review. But, using a new reveals some interesting facts and figures about Indian
scale needs reliability assurances for correct data analysis. investor’s investment preferences and frame of mind.
Reliability refers to how free the scale is from random errors
( 87 )
Table 3. Results of Exploratory Factor Analysis

Factors FL EV VE
F1- Fund Family Returns 4.797 25.391
• Go o d p erfo rmance o f a fund e nh ance s cash inflo w to o ther fund s in the family as w ell. .740
• Mo st o f th e schemes o f mutual fund s available in th e mark et h ave alm o st sam e features. .730
• Sp illo ver effects h ave a po sitive effect o n fund fam ily’s’ mark et share. .695
• Large families d isp lay m o re persistence in returns as co m p ared to sm all family sizes. .675
• Po p ular fund fam ily nam es attract h igh er cash inflo ws in m utual fund s .673
• High fund m anager turno ver is an im p o rtant reaso n fo r th e absence o f p erfo rmance .559
p ersistence by fund fam ilies.
F2- Market Coverage 1.629 18.897
• Fund Pro liferatio n increases m ark et co verage by fund fam ilies. .892
• Returns o n a fund results fro m the p ro p e nsity o f fund families to fo cus o n level o f risk . .809
F3- Economies 1.289 17.824

• Replacem ent o f fund managers d o es no t necessarily results in lack o f perform ance by .793
fund fam ilies.
• Fund family size d eterm ines th e p attern o f returns a fund w ill p ro vid e. .775
• Firm s o pting fo r o utso urcing po rtfo lio m anagem ent functio n are mak ing m utual fund s .770
eco no m ical.
F4- Management Structure 1.017 10.650
• Managem ent structure o f a fund p o sitively affects th e p erfo rm ance o f a m utual fund . .887
Source: Author’s Own Calculation
Notes: FL-Factor Loadings, EV-Eigen Value, VE-Variance Explained
Table 4. Summary of Demographic Profile of years with 48% and followed by 40-50 years age category
respondents with 26%.Out of the available sample mutual fund
investor’s highest qualification is post graduate with 55%
Respondent’s Profile Frequency Percentage
followed by graduates with 26%. Sample investor group
Respondent’s Age
Le ss Than 30 years 22 22 is chiefly dominated by males with 69%. Mode of
30-40 years 48 48 investment most favored by the sample investors is through
41-50 years 26 26 financial advisors or agents with 52% and second most
51-60 years 4 4 favored mode of investment is self with 39%.Prime
Abo ve 60 ye ars 0 0
Respondent’s Gender objective of investing in mutual funds of majority investors
Male 69 69 is for better returns with 49% , chased by tax saving by
Fe male 31 31 23%.
Respondent’s Educational
Qualification To summarize the relationship between two categorical
Und e r Grad uate 2 2 variables cross tabulation has been used. On analyzing
Grad uate 26 26 the association or impact of sample investor’s age on his
Po st Grad uate 55 55
Pro fessio nal 17 17 prime objective of investing, it has been reckoned that
although age affects the risk appetite of investor but it has
Preferred Mode of Investment also been observed that investors between the age
Family/ Friend s 9 9 categories of 30-50 years invest primarily for better returns
Financial Ad visor/ Agent 52 52
Se lf 39 39 and the remaining two categories i.e. age group between
Prime Objective of Investment 51-60 years and less than 30 years want to invest for tax
Fo r Better Re turns 49 49 evasion. These findings can be interpreted in the manner
Fo r Ch ild ren’s Future 11 11 that in early earning age and around the age of retirement
Fo r Retire me nt 16 16
Fo r Tax Saving 23 23
investor’s look for tax benefits and in the middle earning
To Me et Emergencies/ 1 1 age, they want to accumulate more and more funds by
Co ntingencie s investing in funds offering higher returns.On the basis of
Chi-Square test a strong association has been observed as
Tables 4 shows that out of 100 respondents, the
the p-value is .000 and Pearson Chi Square test statistic of
predominant age group of sample investors comes 30-40
100 observed frequencies is 40.212
( 88 )
Table 5. Effect of “Respondent’s Age” on “Prime basis of Chi-Square test as the p-value is .000 and Pearson
Objective of Investing” Chi Square test statistic of 100 observed frequencies is
49.57. Table 7 displays the results.
Age Group FBR FCF FR FTS TME/C Total
Less than 30 6 4 2 9 1 22
years
Table 7. Effect of “Respondent’s Educational
30-40 ye ars 26 1 11 10 0 48 Qualification” on “Prime Objective of Investing”
41-50 ye ars 17 6 3 0 0 26
51-60 ye ars 0 0 0 4 0 4 Educational FBR FCF FR FTS TME/C Total
Above 60 years 0 0 0 0 0 0 Qualification
Total 49 11 16 23 1 100 Und er 2 0 0 0 0 2
Pearson Chi Sq uare- d f-12 P value-.000 Grad uate
40.212 Grad uate 14 1 5 5 1 26
Po st Grad uate 26 7 11 11 0 55
Note: FBR-For Better Returns, FCF-For Children’s Future, FR- Pro fessio nal 7 3 0 7 0 17
For Retirement, FTS-For Tax Saving, TME/C-To Meet To tal 49 11 16 23 1 100
Pe arso n Chi Square - d f-6 P value -.000
Emergencies/ Contingencies 49.57
Similar analysis has been done on sample investor’s age Note: FBR-For Better Returns, FCF-For Children’s Future, FR-
and mode of investment and it has been determined that For Retirement, FTS-For Tax Saving, TME/C-To Meet
in the age group of 30-50 years, most of the investor’s prefer Emergencies/ Contingencies.
to do investing with the help of financial advisors or agents.
Outcomes of investor’s educational qualification and
Table 6 displays the results.This could be a result of trust
preferred mode of investment shows that irrespective of
of investors in competent fund managers and their
literacy levels majority of investors prefer financial agents
improving reputation among investors. Whereas, Investors
and advisors mode of investing due to their expertise,
in the age group of 51-60 and less than 30 years prefer to
time saving etc. Same Chi-Square results have been
do self investing. On the basis of Chi-Square test a strong
observed.Table 8 displays the results.
association has been observed as the p-value is .000 and
Pearson Chi Square test statistic of 100 observed Table 8. Effect of “Respondent’s Educational
frequencies is 63.248. Qualification” on “Selection of Mode of Investment”
Table 6. Effect of “Respondent’s Age” on “Selection of Educational F/F FA/A S Total
Mode of Investment” Qualification
Und er 0 1 1 2
Age Group F/F FA/A S Total Grad uate
Less than 30 years 2 5 15 22 Grad uate 4 15 7 26
30-40 ye ars 3 28 17 48 Post Grad uate 4 26 25 55
41-50 ye ars 4 16 6 26 Professional 1 6 10 17
51-60 ye ars 0 1 3 4 To tal 9 48 43 100
Abo ve 60 years 0 0 0 0 Pearso n Chi Square- d f-6 P value-
Total 9 50 41 100 49.57 .000
Pearson Chi Square- d f-6 P value-
Note: F/F- Family and Friends, FA/A- Financial Advisor/
63.248 .000
Agent, S-Self.
Note: F/F- Family and Friends, FA/A- Financial Advisor/
Whether prime objective of investor’s investment and their
Agent, S-Self
preferred mode of investment are somehow affected by the
While analyzing the association among sample investor’s gender of investor has also been found out. Results display
educational qualification and prime objective of their that prime objective of female investors is tax benefits while
investing and preferred mode of investment, findings male investors main objective is to get higher returns. These
revealed that all undergraduate and majority of both results are in sync with various previous studies which
graduates and post graduate investors main purpose of show that females are risk averse and male investors prefer
investing is to get higher returns whereas investors with higher returns in spite of high risk. A strong association
professional qualification have an equal inclination has been observed on the basis of Chi-Square test as the p-
towards better returns as well as investment options giving value is .000 and Pearson Chi Square test statistic of 100
tax benefits.A strong association has been observed on the observed frequencies is 32.849. Table 9 displays the results.
( 89 )
Table 9. Effect of “Respondent’s Gender” on “Prime Finally, our findings have significance for the question
Objective of Investing” posed by Coase (1937) regarding the determinants of the
frontiers of the firm.Along with these, it has also been
Gender FBR FCF FR FTS TME/C Total
found that several demographic variables like age of the
Male 41 4 10 13 1 69
Fem ale 8 7 6 10 0 31 investor, his educational qualification and gender have a
To tal 49 11 16 23 1 100 considerable impact on their preference of mode of
Pearso n Chi d f-4 P value-.000 investing and prime objective of investing. Following
Square- 32.849 factors have been found out as the predictors of fund family
Note: FBR-For Better Returns, FCF-For Children’s Future, FR-
performance.Table 11 displays the results.
For Retirement, FTS-For Tax Saving, TME/C-To Meet Table 11. Table showing Fund Family Factors affecting
Emergencies/ Contingencies. Mutual Fund Performance
Another finding regarding gender of investors shows that Fund Family Market Economies Management
irrespective of the gender most preferred mode of Returns Coverage Structure
Spillover Effe cts Fund Freq uent Managem e nt
investment is through financial advisors and agents and Prolife ration replace m ent of Structure
strong association has also been shown by Chi-Square Fund
test as p-value is .000 and Pearson Chi Square test statistic m anagers.
Fund Fam ily Risk Pattern of
of 100 observed frequencies is 26.218. Table 10 displays Schem e Prope nsity returns
results. Features
Fund Fam ily Outsourcing
Table 10. Effect of “Respondent’s Gender” on Size
Fund Fam ily
“Selection of Mode of Investment” Brand Nam e
Fund Manager
Gender F/F FA/A S Total Turnover Ratio
Male 1 37 31 69
Fem ale 8 16 7 31 A proposed model comprising of all these variables have
To tal 9 53 38 100 been presented in figure 1. A pragmatic prophecy of the
Pearson Chi d f-2 P value- model is that lately created fund families should endow
Square- 26.218 .000
investments with such trading strategies which are very
Note: F/F- Family and Friends, FA/A- Financial Advisor/ different from the existing funds. Along with this, investors
Agent, S-Self should also be able to reap benefits of firm’s research with
the creation of latest funds.
FINDINGS
The findings of this study make important contributions Fund Family

Returns
to the academic literature in terms of implications for
investors and for fund management companies. 12 mutual
fund family performance items were subjected to principal Market
axis factoring to assess the dimensionality of the data. The Coverage
Fund Family
Kaiser-Meyer-Olkin was .757 which is above the Performance
Mutual Fund
Performance
recommended threshold of .6(Kaiser, 1974) and Barlett’s
Test of Sphericity reached statistical significance indicating Economies
the correlations were sufficiently large for exploratory

factor analysis. Four factors were extracted explaining
72.762% of the variance. This was decided based on Eigen
values and cumulative variance. Factors were rotated using Market
Structure
Varimax rotation. Items that load on the first dimension
suggests it represents Fund Family Returns, second
dimension suggests it represents Market Coverage, third Fig 1: Proposed Mutual Fund Family Performance
dimension proposes Economies and last dimension Determinants Mode
represents Management Structure of the fund family.
( 90 )
CONCLUSION Bar, Michaela., Kempf, Alexander., Ruenzi, Stefan., (Sept

2005). Team Management and Mutual Funds, Center
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Dr. Anoop Pandey Ms. Pooja Chaturvedi

Associate Professor, Bharati Vidyapeeth University Research Scholar, Bharati Vidyapeeth University
Institute of Management and Research, Institute of Management and Research,
New Delhi-110063 New Delhi-110063
( 93 )
Impact of Gender Diversity on Corporate

Reputation of Indian Companies
Amanpreet Kaur
ABSTRACT
Attaining and maintaining a good name in the market is imperative to survive competition. Literature
documents gender diversity as an antecedent of corporate reputation. The study attempts to examine the
influence of women directors on reputation of Indian companies. Data related to Indian companies
constituting BSE 100 index is analysed at two different points of time i.e. 2002-2003 and 2011-2012 to
examine the pattern of female directors on Indian corporate boards. The findings reveal a remarkable
increase in the number of women directors from 2002-2003 to 2011-2012. Presence of women on board
cast a positive but insignificant impact on corporate reputation. The implication for Indian managers is
to adhere to the provisions of new companies' act, 2013 promptly to build better reputation among global
audience.
INTRODUCTION
Resources are crucial for organisations. Stiff competition and global involvement has
highlighted the significance of tacit resources that provide competitive advantage over
rivals (Barney, 2000). Although being aloof from company’s books, they carry impeccable
importance in building up organisational effectiveness and competitiveness. Corporate
reputation has been identified as one such covert resource that brings advantage to
firms in terms of greater employee satisfaction, greater customer satisfaction, lower
negotiating and transactional cost (Rogerson, 1983; Schwaiger, 2004; Eberl and
Schwaiger, 2005; Podolny, 1993) that ultimately improves financial performance
(Barney, 2000).
Gender diversity can also be viewed as an important resource (Brammer et al., 2009).
Literature offers extensive research probing the issues involved in managing diversity
within organisations (Dass and Parker, 1999; Mollica and DeWitt, 1994) and its impact
on firm performance (Filatotchev and Toms, 2003). Board diversity is of prime importance
as the board composition determines the quality of decisions which affect its profitability.
Gender diversity on boards acts as a signal of social responsiveness, which is viewed
favourably by corporate audience (Brammer et al., 2009).
Recent years have witnessed a global move in favour of incorporation of women directors
on board. While legislative moves mandating women directors on boards have been
Key words initiated in nations like Norway, Sweden and Malaysia, women in countries like India
are still struggling to break their barriers. Low number of women on Indian boards
Mutual funds, Fund
clearly depicts the plight of females and the extent of social barriers they face. At this
Family, Performance,
Outsourcing, brand value,
juncture, Indian legislators have made a remarkable move in mandating women
economies, management directors on the board of every listed company, through enactment of new companies
structure. act, 2013. It is momentous to examine the pattern of female recruitment on Indian
corporate boards just prior to the advent of new companies’ act, 2013, to notice
( 94 )
Amanpreet Kaur
willingness of male dominated boards to permit entry to role of gender diversity in framing perceptions about firms
females in the boardroom without any enforcement for it. is growing.
Literature documents that social initiative like recruitment Diversity within boards brings pool of knowledge, skills
of women and minorities builds a favourable impression and enhances creativity, thereby enabling better decision
on stakeholders. Presence of female directors not only making by the orgainsation (Selby, 2000; Ramirez, 2003).
ensures board independence (Brammer et al., 2009) but Agency theory emphasizes the value of good governance
also act as a clue of good governance which is a crucial (Fama and Jensen, 1983) which can improve firm
driver of reputation (Donaldson and Preston, 1995; Luoma reputation (Ljubojevic and Ljubojevic, 2008). Despite the
and Goodstein, 1999; Ljubojevic and Ljubojevic, 2008). The acknowledgement of some challenges in managing diverse
link between gender diversity and corporate reputation boards (Erhardt et al., 2003), there is general agreement
has been well explored in developed nations but lacks that board diversity breaks groupthink and foster board
evidence in context of emerging economies like India. The independence which builds favourable impression among
study attempts to analyse the impact of presence of female corporate audience (Brammer et al., 2009).
directors on corporate reputation in India.
Gender diversity is of particular interest as females on
Measurement of soft asset like corporate reputation board seats act as counsellors for other female employees
impedes research in it. Reputation being perceptual is in the organisation (Catalyst, 1995). Moreover companies
difficult to quantify (Fombrun, 1996). It seems unfit to allowing entry of females in the boardroom depicts
capture it qualitatively. The study measures reputation on company’s non-prejudice behaviour which is welcomed
the basis of number of awards/certifications received for by stakeholders. The strand of literature empirically
CSR activities (Kansal et al., 2014). ‘Much like Hollywood examining the influence of female directors in framing
“oscar” which are designed to attract public attention to perceptions has yielded mixed results. While Pfeffer and
specific movies, so CSR awards draw media attention to Salancik (1978)
winning companies and create intangible benefits from
Smith et al., (2006); Bernadi et al., (2009); Bernadi et al.,
CSR activities,’ Gardberg and Fombrun, (2006). Receiving
(2006); Brammer et al., (2009); Fernandez-Feijoo et al.,
awards for CSR increases corporate reputation. Rao (1994)
(2012) establish a positive link between gender diversity
found that high visibility proceedings such as winning
and corporate reputation; on the flip side Lee and James
product quality certification, improves company’s
(2007) and Gregory et al., (2009) do not favour gender
reputation, hence directly linking awards for CSR activities
diversity on boards. Adding to the scant but growing
to corporate reputation. The study delineates the impact
research unveiling the liaison between gender diversity
of women directors on corporate reputation using awards
and corporate reputation in emerging markets like India,
received for CSR activities as a proxy.
the current study attempts to provide some conclusive
evidence to it.
LITERATURE REVIEW AND HYPOTHESIS Women directors bring resources to the firm which would
DEVELOPMENT otherwise be a missed opportunity (Brammer et al., 2009).
It is argued that gender diversity acts as a crucial resource
Reputation building process is an intricate one.
capable of providing competitiveness and improve
Stakeholders interpret myriad signals to form opinion
organisational effectiveness (Burke, 1997). Signaling
about firms. Along with the firm and market related
theory also posit that women led boards signal social
attributes like CSR, firm size, profitability, market risk, firm
responsiveness and non discriminating culture adopted
age, financial leverage that influence the reputation
by firms which gives a clue to the unapprised stakeholders
formation process, governance attributes like non
about the quality of the firm. Thus literature offers
executive directors, board size, ownership pattern have
theoretical justification for gender diversity to build
also been widely acclaimed as crucial drivers of corporate
favourable perceptions among corporate audience, thereby
reputation (Fombrun and Shanley, 1990; Brammer and
giving way to formulation of following hypothesis:
Millington, 2005; Brammer and Pavelin, 2006; Brammer et
al., 2009). However the strand of literature examining the H1: there is a positive impact of gender diversity on
corporate reputation.
( 95 )
Impact of Gender Diversity on Corporate Reputation of Indian Companies
RESEARCH METHODOLOGY gender diversity on boards. Number of companies that

were male led in 2003 had reduced significantly from 65
The sample of the study comprises of Indian companies
(in 2003) to 43 (in 2012). There are 22 companies which
that constitute BSE100 index. The sources of data include
have allowed female inclusion on their boards over ten
annual reports of Indian companies and ACE Equity
year period giving away gender based stereotypes.
database. Due to unavailability of data, the final sample
However the present state of women directors can still be
for the study got reduced to 90 companies. The technique
regarded as tokens as they fail to constitute a critical mass
of multiple regression is applied to examine the impact of
(as defined by Torchio et al., 2011), as no Indian company
presence of women directors on reputation of Indian
forming BSE100 index recruits three or more females on
companies. Variables under study are categorized into
their board.
three sub-headings:
The study also tries to analyse the impact of presence of
Dependent Variable: Corporate reputation is taken as
women in the boardroom on its reputation. A preliminary
dependent variable, which is measured through number
analysis is undertaken through independent sample t-test
of awards/certifications received for CSR initiatives
as shown in table 3. In 2002-2003, the reputation of male
undertaken by Indian companies. Content analysis of
dominated companies is more, whereas in 2011-2012,
annual reports for each company resulted in reputational
companies employing women directors on their board
score ranging from 0-11, where 0 denotes no award received
portrayed better reputation. The main aim of this study is
by the company and 11 denotes that the company has
to explore the relevance of female presence on board in
been recognised for all 11 CSR categories. The information
aggrandizing reputation of Indian companies. For this
related to awards received by a body corporate is gathered
multivariate regression analysis is undertaken, the results
from ‘Awards and Recognitions’ section in the annual
of which are depicted in table 4. Model 1 analyses the
report or sometimes awards are mentioned in the
impact of presence of female directors on corporate
‘director’s report’ or ‘management discussion and
reputation in 2002-2003. Large firms are more visible, have
analysis’ section or it appears in ‘highlights’ section.
greater access to resources and thus are expected to be
Independent Variables: The impact of female directors on viewed propitiously. In line with this argument, firm size
corporate reputation is examined by introducing dummy casts a significant positive impact on reputation (p-value
variable which takes the value 1 if at least one female 0.00 < 0.01). Good performance predisposes stakeholders
director is present on the board and 0 otherwise. to view firm’s favourably (p-value 0.00 < 0.01). Presence of
females on board cast a negative but insignificant influence
Control Variables: Some control variables have been
on corporate reputation. The reason for such obscure
introduced in the regression model so that the impact of
finding could be attributed to the very low number of female
independent variable is clearly noticed. Past studies
directors on board seats in India in 2002-2003. The model
suggest inclusion of financial performance, firm size,
captures 12 percent variation in corporate reputation.
ownership pattern, firm leverage, market risk (Fombrun
and Shanley, 1990; Brammer et al., 2009; Hall and Lee, Model 2 captures the impact of presence of female directors
2014). Table 1 lists the variables used in the current study. on corporate reputation in 2011-2012. Firm size cast a
significant positive influence on corporate reputation (p-
EMPIRICAL RESULTS value 0.00 < 0.01). A high level of debt raised by firm imbues
financial burden on them and is perceived negatively by
An effort has been made to examine the trend of female
corporate audience (p-value 0.00 < 0.01). Presence of female
appointment on corporate boards in India. For this the
directors in boardroom cast a positive but insignificant
actual number of women directors is scrutinised at two
impact on corporate reputation. Hence it can be inferred
points in ten year time frame i.e. 2002-2003 and 2011-2012.
that ten years back in 2002-2003 appointment of female
Data related to the period just prior to the advent of
directors on top management positions was not viewed
companies act, 2013, reveals that the exposure given to
favourably, but the trend seems to be changing and efforts
female employees in companies has improved. It implies
made by companies to appoint women and minorities
that Indian corporate managers are following the global
signals social responsiveness, which is perceived
move of gender egalitarianism. Table 2 clearly reveals a
propitiously by stakeholders.
significant increase in the number of companies promoting
( 96 )
Amanpreet Kaur
Table 1 Description of variables used

Variable name Measurement and symbol Description
used in the study
S. No.
1. Financial perfo rm ance ROA Return on assets = Net p ro fits after tax /
assets (extracted from ACE Equity).
2. Corp orate reputatio n Co rpo rate reputation Aw ard s received fo r CSR initiatives as
pro xy for corp orate rep utation.
3. Financial leverage Debt Equity Ratio (DER) Debt / equity (extracte d fro m ACE
Equity).
4. Firm Size Total Assets (FS) Total asse ts (extracted fro m ACE Equity).
5. Ow nership Pattern Institutio nal Shareho ld ing ISH= p er cent of share hold ing in
institutio nal hand s (extracted fro m ACE
(ISH) Equity).
6. Mark et Risk Beta Beta (extracted from ACE Equity).
7. Fem ale d um m y FD (1,0) 1 if at least one fem ale d irector is present

on the bo ard and 0 o therw ise (extracted
fro m annual repo rts).
Source: author’s own compilation

Table 2 Number of women across Indian Corporate Board
Number of Companies Number of Companies Percentage Change
Number of 2003 2012

females
0 65 43 (28)
1 20 32 60
2 5 15 200
Source: author’s own calculations

Table 3 Reputation analysis based on gender
Female Male t-value
Variables (p-value)
Co rpo rate reputation -0.25

3.84 3.98
2003 (0.79)
Co rpo rate reputation 1.58

7.23 6.16
2012 (0.11)
( 97 )
Impact of Gender Diversity on Corporate Reputation of Indian Companies
Table 4: Multivariate regression analysis taking corporate reputation as dependent variable

Model 2
Model 1
Variables Coefficient t-value Coefficient t-value
Co nstant -2.51 -1.35 -3.61 -1.39
Log firm size 0.72 3.55*** 1.12 4.58***
Financial leverage -0.07 -0.81 -0.56 -2.59***
Financial p erfo rmance 0.095 2.29 ** 0.05 1.05
Mark et risk 0.24 0.40 -0.85 -0.99
Ow nership p attern -0.01 -0.59 -0.008 -0.39
fem ale d um m y -0.49 -0.72 0.42 0.66
Ad justed R2 0.1243 0.1989
CONCLUSION female representation on boards of directors

The purpose of current research is to explore the relevance associate with the ‘most ethical companies’ list?.
Corporate Reputation Review, 12(3), 270-280.
of women directors on the board in building favourable
perception among stakeholders. The pattern of recruitment Bernardi, R. A., Bosco, S. M., & Vassill, K. M. (2006). Does
of women directors on corporate board clearly exhibits a Female Representation on Boards of Directors
move towards gender egalitarianism. Data reveals that Associate With Fortune’s “100 Best Companies to
Work For” List?. Business & Society, 45(2), 235-248.
the companies which are solely male dominated have
recently realised the ingenuity of gender diversity and Brammer, S. J., & Pavelin, S. (2006). Corporate reputation
hence permit access to women in the boardroom. Gradually and social performance: The importance of fit.
Journal of Management Studies, 43(3), 435-455.
Indian companies are trodding the global move towards
gender equality. The impact of presence of female directors Brammer, S., & Millington, A. (2005). Corporate reputation
on corporate reputation is insignificant attributed to the and philanthropy: An empirical analysis. Journal of
low number of women on the board seats. According to business ethics, 61(1), 29-44.
Joecks et al., (2013), women must constitute a critical mass Brammer, S., Millington, A., & Pavelin, S. (2009). Corporate
to make their presence known. However with the reputation and women on the board. British Journal
implementation of provisions of new companies act, 2013, of Management, 20(1), 17-29.
every listed Indian company would have to appoint Burke, R. J. (1997). Women directors: selection, acceptance
women on the board, which will increase women and benefits of board membership. Corporate
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in developed nations (Brammer et al., 2009). Dass, P., & Parker, B. (1999). Strategies for managing human
resource diversity: From resistance to learning. The
The study suffers from certain limitations. First, sample
Academy of Management Executive, 13(2), 68-80.
size of the study is small as it analyzes the companies
Donaldson, T., & Preston, L. E. (1995). The stakeholder
constituting BSE100 index only. A large sample might
theory of the corporation: Concepts, evidence, and
provide better results. Second, the study examined the
implications. Academy of management Review, 20(1),
relevance of women directors just prior to the enactment of 65-91.
companies’ act, 2013. Future research may analyse data
Eberl, M., & Schwaiger, M. (2005). Corporate reputation:
covering post enactment period. Third, different measure
disentangling the effects on financial performance.
of corporate reputation may provide different results.
European Journal of Marketing, 39(7/8), 838-854.
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Amanpreet Kaur
Senior Research Fellow
Department of Commerce, Guru Nanak Dev University,
Amritsar-143005, Punjab-India
( 99 )
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Seminar Chairpersons Co-Chairpersons

Remonitisation : Prof. Debabrata Mitra Dr. Anilkumar G Garag
Politics vis-à-vis Economics Dept. of Commerce Director
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Hyderabad, (Telangana) Bhagalpur (Bihar)
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University of Delhi University of Rajasthan
(Delhi) Jaipur (Rajasthan)
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Indian Economy Head, Dept. of Commerce Associate Professor
Guru Nanak Dev University Vinoba Bhave University
Amritsar (Punjab) Hazaribag (Jharkhand)
Manubhai M Shah Memorial Research Award Session (MMSMRA):

EMPIRICAL RESEARCHES IN THE AREA OF MARKETING
Prof. Prashant Kumar Prof. Kavaldeep Dixit
Dept. of Commerce Dept. of Marketing
Banaras Hindu University International School of Informatics &
Varanasi (U.P.) Management, Mansarovar, Jaipur (Rajsthan)
Prof. Samiuddin Memorial ICA Research Scholar Award Session

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Bellary (Karnataka) New Delhi, (Delhi)
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Print : ISSN : 19-512X | Online : ISSN : 2454-6801

THE INDIAN JOURNAL

Tej Singh Socio-Economic Impact of Micro Financing through Self-

S.C. Das Financial Literacy among Indian Millennial Generation

C. K. Sonara, Dhaval Sharma An Empirical Study of Corporate Environmental

Ayekpam Ibemcha Chanu A Study on Efficiency of Select Regional Rural Banks

Dipen Roy and DCF, Strategic Approach and Multi-Factor Model: An

Anoop Pandey and Modeling for Determinants of Mutual Fund Family

Amanpreet Kaur Impact of Gender Diversity on Corporate Reputation of

Prof. H.K. Singh - Managing Editor

With Secretariat at : Faculty of Commerce, Banaras Hindu University,

A Study on Efficiency of Select Regional Rural Banks in India 48-59

Impact of Gender Diversity on Corporate Reputation of Indian Companies 94-99

Prof. H.K. Singh

Prof. H.K. Singh

Socio-Economic Impact of Micro Financing through

Tej Singh and Parul Mittal

Researchers Objectives State/ District Conclusions of The Study

OBJECTIVES OF THE STUDY SGSY/NRLM (Swaranjayanti Gram Swarozgar Yojana/

The present study is empirical in nature as it is mainly

Table 6: Income Earned from the Activity

Particulars MDA SGSY Total

SUGGESTIONS Batra, Vikas (2012). Factors Determining Women Self Help

Dr. Tej Singh Dr. Parul Mittal

Email : [email protected] Email : [email protected]

Financial Literacy among Indian Millennial

Gender; Level of Financial Literacy Financial Behaviour

knowledge on financial behaviour and attitudes.

6.1: Sampling Technique and Adequacy Table-1 Targeted Respondents

Jumpstart Survey (2008); Lusardi et al (2010

Table:3 Tests of Normality

Variables Kolmogorov-Smirnova Shapiro-Wilk

Normality Test: According to Marôco (2010)

Table 4 : Area Wise Measurement of Level of Financial Literacy

Regulatory Framework Marketing 70 96.97 Chi-Square 7.979

Table: 5 Influences of Select Control Variables on Financial Knowledge

Code Grouping Test Non-Parametric Descriptive Statistics Test Statistics

RP* denotes respondents profile

Table 8. Pseudo R-Square Increased financial knowledge is also found to influence

The table: 10 reveals that initial Log likelihood value

Table-13 Likelihood Ratio Tests

Model Fitting Criteria Likelihood Ratio Tests

Dr. S.C. Das

An Empirical Study of Corporate Environmental

C. K. Sonara, Dhaval Sharma and Ashav Patel

• Developing greener processes or products.

medium like in environmental policy statements or

“Environmental reporting covers the preparation and

• Some other medium (e.g. staff newsletter, video, CD Study - 1

Environmental Accounting and Reporting - Theory, Law Researcher

4. Corporate Environmental Accounting and OBJECTIVES OF THE STUDY

Environmental Reporting Disclosures

Period of the Study

A study of Corporate Environmental Accounting and

Limitations of the Study

(3) The study has considered 30 units of the Fig. 3

ENVIRONMENTAL ACCOUNTING AND The group- wise number of companies making

Global Warming Carbon Credit

A) Avoids restrictions on growth because pollution is (D) Textiles Industries

Bhatt, K., Environmental Accounting Corporate Disclosure