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The Crucial Role Of Bank Economists In Transforming The Banking System In India. Economists Have To Be More Main Streamed Within The Operational Structure Of Commercial Banks. Apart From The Traditional Functioning Of Macro-Scanning, The Interlinkages Between Treasuries, Dealing Rooms And Trading Rooms Of Banks Need To Be Viewed Not Only With The Day-To-Day Needs Of Operational Necessity, But Also With Analytical Content And Policy Foresight. Today, Operational Aspects Of The Functioning Of Banks Are Attracting Intensive Research By Professional Economists. In Particular, Measuring And Modeling Different Kinds Of Risks Faced By Banks, The Behavior Of Risk-Return Relationships Associated With Different Portfolio Mixes And The Impact Of Fluctuations In Financial Markets On The Financial Performance Of Banks Are Areas Which Lend Themselves To Analytical And Empirical Appraisal By Economists And Econometricians. They, In Turn, Are Discovering The Degrees Of Freedom And Room For Analytical Maneuver In High Frequency Information Generated By The Day-To-Day Functioning Of Banks. It Is Vital That We Develop An Environment Where These Synergies Are Nurtured So As To Serve The Longer-Term Strategic Interests Of Banks. Even In Real Time Trading And Portfolio Decisions, The Fundamental Analysis Of Economists Provides An Independent Assessment Of Market Behavior, Reinforcing Technical Analysis. A Serious Limitation Of The Applicability Of Standard Economic Analysis To Banking Relates To The Inadequacies Of The Data-Base. Absence Of Long Time Series Data Storage In The Banking Industry Often Poses Serious Problems To The Quest For The Formal Analytical Relationships Between Variables. Even If Such Data Exist, The Presence Of Structural Breaks May Blur Meaningful Analysis Based On Traditional Formulation. Economists Need To Think Innovatively To Overcome This Problem. Use Of Panel Regression, Non-Parametric Methods And Multivariate Analyses...
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