banking in digital...
TRANSCRIPT
Banking in Digital Era
Regaining Consumer Trust
Volume.9, No.1, Jan-June, 2019 ISSN: 2249-2143
International
Journal of
Business
Management
&
Research
1. Indian Banks: Transformation
Through E- Delivery Channels- Challenges
& Opportunities
59. An Analysis of Customer’s Preference
towards Traditional Banking and E-
Banking in Mansa District of Punjab
93. Impact of E-Commerce in Daily Life
International Journal of Business Management
&
Research
(A Bi-Annual Journal)
ISSN: 2249-2143
Volume 9, No. 1, Jan-June, 2019
-
An official publication of
University School of Business
Management Desh Bhagat University
Amloh Road,
Mandi Gobindgarh Fategarh Sahib-
147301 Punjab, INDIA
Year of Publication: 2019
© Desh Bhagat University
Disclaimer:
The views & opinions expressed and interpretations made in the Journal are solely of respective authors and should not be attributed to Desh Bhagat University. The editor disclaim all for any responsibility injury to
persons or property resulting from any ideas or product or practices referred in papers published in the Journal . All effects have been made to ensure accuracy, but the editors or DBU not be held responsible for any
remaining inaccuracies or omissions.
INTERNATIONAL JOURNAL OF BUSINESS MANAGEMENT & RESEARCH – A BI-ANNUAL JOURNAL (ISSN 2249-2143)
Contents Page No.
1. Indian Banks: Transformation Through E-Delivery Channels - Challenges and
Opportunities Prof.(Dr.) Bishnupriya Mishra ---1
2. Customer Services in Banks at Crossroads: An Empirical Analysis in Punjab
Dr. R.K. Uppal ---10
3. Linguistic and Social Impediments to Oral Fluency and the Speaking Skill of
Students at College of Business Administration – Kuwait University Ahmad Ali Sahiouni ---25
4. An Empirical Study on Calendar Anomalies in the Indian Stock Market
ThilakVenkatesan&Darshan Kumara. M ---42
5. An Empirical Study to Compare Non-Performing Assets in Private Sector Banks
in India Munish Gupta ---53
6. An Analysis of Customers’ Preference towards Traditional Banking and E-
Banking in Mansa District of Punjab RajniBala ---59
7. A Comparative Study on Profitability Analysis of Selected Indian Information
Technology Industries
Tegjit Kaur ---67
8. Medical Tourism: A Paradigm in our Country Pooja Rani ---84
9. Impact of E-Commerce in Daily Life
Tanvi Jindal ---93
International Journal of Business Management & Research
EDITORIAL BOARD
Patrons
Dr. Zora Singh
Chancellor, Desh Bhagat University
Editor-in-Chief
Dr. Shalini Gupta Professor
University School of Management
Desh Bhagat University
ASSOCIATE EDITORS
Dr. Rimpi Walia Professor
University School of Management,
Desh Bhagat University
Dr. Rajni Saluja Associate Professor
University School of Management
Desh Bhagat University
ADIVSORY BOARD
Prof. Azhar Kazmi Former Head, Dept. of Business Admin.
Aligarh Muslim University and
Visiting Professor of Management at
King Fahd University of Petroleum and Minerals,
Saudi Arabia
Dr. D P Goyal Director, IIM
Shillong
Dr. S.S. Prasada Rao Director, Academics
Gitam University
Vishakapatnam
Dr. Rattan Sharma Director,
Vivekananda Institute of Professional Studies Technical Campus
Delhi
Dr. Jasmeer Singh Saini Former HOD & Prof. of Management
National Institute of Technical Teacher Training & Research
Chandigarh
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Indian Banks: Transformation
Through E-Delivery Channels - Challenges and Opportunities
Prof.(Dr.) Bishnupriya Mishra
Director, P J Group of Institutions, Kesura, Bomikhal, Bhubaneswar
Abstract
The severe crises of 1991 gave birth to the new economic thought in the country. A bundle of measures were taken
to remove the various deficiencies and rigidities in the Indian economy. Hence, new economic policy was introduced
to mold the Indian economy to the right path. Financial sector reforms and banking sector reforms are the part and
parcel of economic reforms, which strengthen the economic reforms. Under the regime of banking sector reforms,
IT Act of 1999 gave new dimensions to the Indian banking sector. IT has created transformation in banking
structure, business process, work culture and human resource development. It affected the productivity, profitability
and efficiency of the banks to a large extent.
The present paper analyzes the major parameters of productivity, profitability of major banks in the pre and post e-
banking period. The paper concludes that performance of all the banks under study is much better in post-e-banking
period and further foreign banks are at the top position, whereas the performance of the public sector banks is
comparatively very poor. The paper suggests some measures to tackle the challenges faced by the banks particularly
public sector banks. At the end, paper suggests how public sector banks can convert the emerging challenges into opportunities?
Keywords: [Indian Banks, E- Delivery Channels]
Introduction
Strengthening the financial sector and improving the functioning of financial markets have been
the core objective of the financial sector reforms in India. The significant transformation of the
financial system in the country is clearly evident from the changes that have occurred in the
financial markets, institutions and products.
The country witnessed in 1990 an economic crisis leading to a fast decline in the GDP, a high
rate of inflation, adverse BOPs due to a widening gap in the current account deficit and a decline
in the foreign exchange reserves. The country had to borrow resources from foreign central
banks and other foreign government agencies against the pledge of gold so as to avoid a default
on international indebtedness. There were some banking sector deficiencies ahead the economy,
which were adversely affecting the economic growth of our country such as low productivity and
profitability, some public sector banks have been incurring losses year after year, poor customer
service, outdated work technology etc.
Keeping in mind all these distortions in the economic, financial and banking sectors, the
government of India and the RBI thought it was necessary to introduce reforms in the financial
and baking sector also, so as to promote rapid economic growth and development with stability
through the process of globalization, liberalization and privatization in the financial system to
make the financial system more competitive and gets integrated with the world economy through
internationalizations of financial markets in the world.
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Banking Sector Reforms
The government of India, under the chairmanship of Sh. M. Narasimham, an Ex-Governor of
RBI, appointed the Narasimham Committee-I (NC-I) in April 1991. The committee examined all
the aspects relating to the structural organization, functions and procedures of financial system
and submitted its report on November 16, 1991. A number of reform initiations have been taken
to improve or minimize the distortions impinging upon the efficient and profitable functioning of
banks.
These reforms have improved the banks’ performance in an excellent way but due to the
cataclysmic changes taking place in the world economy towards globalization, there was need to
inject other doze of reforms. Hence, second phase of banking sector reforms are initiated by NC-
II in 1998 and these reforms are continuously regulating the entire banking system till date.
Objectives
The present paper analyzes the impact of IT on the transformation of banks during the second
phase of banking sector reforms. The specific objectives of the paper are:
1. To study the process and contents of bank transformation in the regime of post-second
banking sector reforms.
2. To analyze the comparative performance of public sector banks, new private sector banks
and foreign banks in pre and post e-banking period.
3. To study the challenges and opportunities for the banking industry particularly to the
public sector banks.
Hypothesis
1. The performance of all the banks under study is significantly better in post-e-banking
period than pre-e-banking period.
2. The performance of foreign banks is significantly better than new private sector banks
and public sector banks.
3. The performance of new private sector banks is significantly better than public sector
banks.
Research Methodology
The present paper is concerned with the Indian banking industry. Total nine top banks have been
selected on the basis of their market share in business in 2003-04, three banks from each bank
group i.e. public sector banks, new private sector banks and foreign banks.
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Selected Banks
Public Sector Banks New Private Sector
Banks Foreign Banks
State Bank of India
(SBI) HDFC Bank Citibank
Bank of Baroda (BOB) ICICI Bank Standard Charted Bank (SCB)
Canara Bank (CB) Axis Bank The Hongkong and Shanghai Banking
Corporation (HSBC)
To compare the performance of selected banks in pre and post e-banking period, ratio
analysis method is used. The following ratios are analyzed to examine the performance of the
selected banks.
Labour Productivity Ratios
(a) Deposits per Employee
(b) Credits per Employee
(c) Business per Employee
Branch Productivity Ratios
(a) Deposits per Branch
(b) Credits per Branch
(c) usiness per Branch
Profitability Ratios
(a) Spread as Percentage of Working Funds
(b) Burden as Percentage of Working Funds
(c) Net Profit as Percentage of Working Funds
The study is concerned with the second-post banking reforms period i.e. 1998-99 to
2003-04. The time period is further divided into two parts i.e. pre-e-banking period (1998-2001)
and post-e-banking period (2001-04).
Bank Transformation and Information Technology
The second banking sector reforms gave much importance to the modernization and technology
up gradation. The IT Act, 1999 started the speedy process of e-banking. Transformation started
to take place in number of aspects such as structure, HRD, IT etc.
Bank Transformation
The term transformation in Indian Banking Industry relates to intermediately stage when the
industry is passing from the earlier social banking era to the newly conceived technology based
customer - centric and competitive banking. The activities of banks have grown in multi-
directional as well as in multi-dimensional manners. During transformation, all known
parameters of the earlier regime continuously change like:
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(i) Capital Restructuring (ii) Financial Re-engineering
(iii) Information Technology (iv) Human Resource Development
Bank Transformation/ Stages of Transformation In Indian Banks
Stage of
Transformation Structure of Banks Objectives of the Banks
Nature of
Technology Used
Pre- Nationalization of
Banks (before 1969) Private Control of Banks Higher Profitability Manual Work
Post- Nationalization
of Banks (1969 - 90) Control of Govt. Social banking
Limited
Computerization
Economic Reforms
(1991- 2000)
- Entry of Foreign and
NPSBs
- Social Banking to IT Based
banks
- Higher Profitability
- Fierce Competition E - Banks
Current Stage Implementation of various
committees reports
- New Products and
Services
- Entry in Insurance
- CRM with IT
- Maximum use of
IT
- Mobile ATMs
Process of Transformation
Parameters of Transformation Process Implications
Structure
Business Re-engineering
Human Resource development
Work Culture
Information Technology
System, Process and Procedures
Ethos/Philosophy
IT as the catalyst of
Transformation
- Improved and efficient
structure
- Improved vision for business
-Productivity, profitability and
efficiency has increased
- Innovations are taking place
- International outlook
- Inspire employees
- More ethical work culture
- Vision for global economy
Information Technology
Delivery of bank’s services to a customer at his office or home by using electronic technology
can be termed as e-banking. The quality, range and price of these e-services decide a bank’s
competitive position in the industry. The virtual financial services can be largely categorized as
follows:
Automated Teller Machines:
- Cash withdrawals - Details of most recent balance of account
- Mini-statement - Deposit facility - Payments to third parties
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EFTPoS: EFTPoS card used to initiate transactions:
- Authorization and transaction capture processes take place electronically.
- Transaction confirmed manually.
- Funds not debited electronically.
Remote Banking Services:
- Balance enquiry
- Statement ordering
- Funds transfer (payment) to third parties
- Funds transfer between customer’s different accounts
- Order traveler’s cheques and other financial instruments.
Smart Cards:
- One smart card can contain the functionality of several different types of cards issued
by different banks while running different types of networks.
- Smart card a truly powerful financial token, giving user access
- Debit facility
- Charge facilities
- Credit facilities
- Electronic purse facilities at national and international level.
Internet Banking: The latest wave in IT is Internet banking. It is becoming more obvious that
the Internet has unleashed a revolution that is affecting every sphere of life. Being an interactive
two-way medium, the Net, through innumerable websites, enables participation by individual in
B2B and B2C commerce, visits to shopping malls, books-stores, entertainment sides, and so on
cyberspace.
Results and Discussion
Labor Productivity:
Public Sector Banks
Labor productivity brings in light employee’s capacity to produce. The productivity in terms of
business per employee of all the three public sector banks is increased almost double time in all
the three banks during partially e-banking period i.e. 2001-04 as compared to that in non-e-
banking period i.e. 1998-2001, whereas variations in terms of co-efficient of variations are
maximum in non-e-banking period. From all the three public sector banks, Bank of Baroda
shows the highest productivity in both the durations i.e. Rs.1.53 lakhs during 1998-2001 and
Rs.2.57 lakhs during 2001-04 as compared to that of other two banks.
New Private Sector Banks
All the three new private sector banks show increase in their productivity in partially e-banking
period from non-e-banking period except UTI Bank, which shows decrease in its productivity.
Variations are maximum in non-e-banking period in all the selected banks. Although,
productivity of UTI Bank is decreased, even it shows the highest labor productivity in both the
durations i.e. Rs.11.41 lakhs during 1998-2001 and Rs.9.79 lakhs during 2001-04 whereas ICICI
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Bank is following UTI Bank with labor productivity of Rs.7.83 lakhs and Rs.9.53 lakhs
respectively during both the durations.
Foreign Banks
Labor productivity is increased in all the selected foreign banks in all the years under study and
variations are maximum in non-e-banking period. It shows increase almost of Rs.2-3 lakhs
during the e-banking period as compared to that during non-e-banking period. It is the highest in
Citibank i.e. Rs.12.70 lakhs during 1998-2001 and Rs.17.32 lakhs during 2001-04 with the major
difference from the other banks whereas SCB shows Rs.8.05 lakhs and HSBC Rs.6.86 lakhs
during 2001-04.
Branch Productivity
Public Sector Banks
The branch productivity of public sector banks, which depicts the capacity of a branch to
produce, is also higher during partially e-banking period in all the banks as compared to non-e-
banking period, whereas variations are maximum in non-e-banking period in all the banks under
study. It is the highest in SBI i.e. Rs.33.29 cr. during 1998-2001 and Rs.47.93 cr. during 2001-04
and Canara Bank is following the SBI with Rs.47.01 cr. business per branch during 2001-04
where Bank of Baroda shows Rs.37.65 cr. productivity ratio.
New Private Sector Banks
The branch productivity of new private sector banks is higher during e-banking period as
compared to non-e-banking period in case of HDFC Bank i.e. Rs.148.39 cr. during 2001-04 that
comes up from Rs.102.42 cr. during 1998-2001, where ICICI Bank shows increase from
Rs.127.22 cr. to Rs.242.03 cr. almost double, but UTI Bank shows decrease in its branch
productivity from Rs.166.32 cr. to Rs.164.21 cr. during the non-e-banking and partially e-
banking period respectively. Overall, branch productivity is the highest in case of UTI Bank
during 1998-2001 i.e. Rs.166.32 cr. but during 2001-04 ICICI Bank leads to other banks with
Rs.242.03 cr. with an excellent growth in its productivity.
Foreign Banks
The branch productivity shows fluctuations in all the three foreign banks in all the years but in
case of Citibank it is decreased from Rs.1631.34 cr. during 1998-2001 to Rs.1396.22 cr. during
2001-04 with 12.82 pc fluctuations in terms of co-efficient of variations. SCB and HSBC shows
increase in their branch productivity during the e-banking period over the non-e-banking period.
Overall, it is the highest in both the durations in Citibank i.e. Rs.1396.22 cr. in 2001-04 even it
shows decrease in its productivity, both the other banks followed this bank.
Overall, it can be concluded that labor productivity and branch productivity is better, showing
excellent growth during the e-banking period as compare to non-e-banking period. New
electronic techniques are used to attract more and more customers especially, e-channels are used
to meet the increasing expectations of the customer. On the other hand, labor and branch
productivity is the highest in all the foreign banks with Citibank at the top position, new private
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sector banks are following foreign banks even in case of ICICI Bank & UTI Bank, and labor
productivity is more as compared to that of SCB & HSBC. Public sector banks are far behind the
foreign banks and new private sector banks with large extent of difference, which cannot be
ignored, mainly due to their non-electronic work culture.
Profitability Ratios
Public Sector Banks
Profitability of public sector banks is decreasing during 1998-2001 i.e. non-e-banking period,
but it shows increasing trend in the partially e-banking period i.e. 2001-04, resulting more
profitability in partially e-banking period as compared to that in non-e-banking period. But
profitability of Canara Bank is increased almost three times, it shows the highest profitability
during 2001-04 i.e. 1.20 pc, even it is the least during 1998-2001 i.e. 0.44 pc, one reason is
decrease in its burden, where Bank of Baroda shows the highest 0.70 pc during 1998-2001
following Canara Bank with 0.97 pc profitability ratio in 2001-04. Overall, Canara Bank shows
much better profits having positive impact of technology.
New Private Sector Banks
Profitability of all the three new private sector banks shows fluctuating trend, it is more in e-
banking period in ICICI Bank & UTI Bank but lesser in case of HDFC Bank as compared to the
profitability during non-e-banking period. Profitability variations are the highest during non-e-
banking period. Profitability of HDFC Bank is decreased during partially e-banking period i.e.
from 1.42 pc to 1.24 pc mainly due to decrease in spread which is further witnessed by falling
interest income, but even shows the highest profitability as compared to ICICI Bank i.e. 0.90 pc
and UTI Bank i.e. 1.02 pc during 2001-04.
Foreign Banks
Profitability of selected foreign banks shows fluctuating trend during the study period but
with tremendous increase in their profitability during partially e-banking period. Profitability of
all the three banks is higher during 2001-04 as compared to that during 1998-2001. Fluctuations
are maximum during non-e-banking period in Citibank but these are the highest during 2001-04
in case of other banks. Profitability of SCB is the highest during 1998-2001 i.e. 1.84 pc and
during 2001-04 i.e. 2.22 pc followed by Citibank with 1.37 pc and 1.66 pc profitability
respectively during both time periods. Overall, profitability of all the foreign banks is increased
mainly due to their check on burden.
It can be concluded that profitability of foreign banks is the highest with SCB at the top
position, where new private sector banks are following foreign banks, initiated to fill this gap but
profitability of public sector banks is far behind the profitability of foreign banks and new
private sector banks. Even then all the three bank groups show increase in their profitability
during e-banking period.
Testing of Hypotheses
The table given below indicates that performance of almost all the banks is significantly
better in the e-banking period except some banks.
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Table: Testing of Hypothesis in Employee Productivity, Branch Productivity and
Profitability during Pre and Post e-banking Period (t-test)
Banks Employee Productivity Branch Productivity Profitability
SBI 12.96* 24.43* 2.08
BOB 311.00* 18.37* 1.22
CB 22.94* 15.50* 7.05*
HDFC 4.80* 4.14* 0.69
ICICI 1.24 2.37 0.10
UTI 1.69 0.28 3.95*
Citibank 1.63 2.09 1.10
SCB 4.12* 0.90 1.39
HSBC 5.58* 3.37* 0.68
Note: * Significant at 5 percent level (2-tailed)
This table indicates that the performance of foreign banks is better than new private sector banks
and also public sector banks. Similarly, the performance of new private sector banks is better
than public sector banks.
Table: Statistical Analysis of Comparative Performance of Selected Banks of Three Bank
Groups (t-test)
Banks Employee Productivity Branch Productivity Profitability
Citibank & HDFC 5.85* 11.76* 2.81*
Citibank & SBI 12.09* 12.07* 9.55*
HDFC & SBI 11.58* 171.98* 6.14*
Note: * Significant at 5 percent level (2-tailed)
Future Areas of Indepth Research
1. Study of performance of each e-channel at bank and bank group level separately.
2. Study of cost-benefit analysis of IT related aspects.
3. Study of quality of customer service through e-banking services.
4. Feasibility of e-banking in rural and semi-urban areas especially the management of
transformation.
Conclusion
The paper concludes that transformation is taking place almost in all categories of the banks.
This transformation will helpful to cope with new economic and financial policies of the banks.
IT is playing a crucial role to create the drastic changes in the banking industry particularly in the
new private sector and foreign banks. The private banks take a big share of cake; our public
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sector banks are still lagging behind regarding the various financial parameters. The immense
opportunities are also available for the public sector banks if they change/modify and adopt new
policies to combat the different recent challenges.
It can be concluded that mere introduction of IT alone will no be sufficient to bring necessary
performance improvement and to get the competitive edge. Intelligent people are required to use
such intelligent tools. Thus, even though IT management is a challenge flow in future banking
scenario, marketing not technology is going to be the challenge.
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Customer Services in Banks at Crossroads: An Empirical Analysis in Punjab
Dr. R.K. Uppal Director, ICCSR Sponsored Major Research Project, D.A.V. College, Malout (Punjab)
Abstract
Apart from attracting new potential customers, business organizations, these days, realize the importance of
retaining the existing customers. Developing long-term relationship with latter, requires the firms to ensure
customer delight through quality service. Hence, to have a competitive edge, companies/multinational companies
are focusing on service quality. In this study, an attempt has been made to analyze the desirability of 1200 bank
customers regarding the reputation, service, performance, pricing pattern and location of a bank and the service they actually perceive. Hence, present paper studies the perceptions of bank customers regarding the gap between
desirability and availability of banking services in three bank groups, namely, public sector, private sector and
foreign banks. The study was conducted in Ludhiana district of Punjab in the month of October; 2018.Three bank
branches working in Ludhiana district have been taken from respective bank groups. On the basis of five point
Likert type scale, the study concludes that desirability regarding all parameters is very high as compared to
availably and hence, gap is widening. Various statistical tools like average, standard deviation, co-efficient of
variation and weighted average scores has been used to compare the perceptions of customers regarding banking
services of various banks. On the basis of empirical analysis regarding perceptions of bank customers about
desirability and availability of banking services, the paper offers some recommendations to improve their services,
reputation in the market, technology, location and pricing pattern. The paper also highlights the problems that may
arise while implementing these measures and recommends solutions to remove/minimize these hurdles.
Keywords: [Desirability, Availability of Banking Services, Desirability -Availability Gap, Measures to Bridge
- Widening Gap]
Introduction
New Economic Policy of 1991, globalization, liberalization and deregulation have made
customers more concerned about their money value and surrounding environment that leads to
high customer expectations from service providers. They are also becoming increasingly critical
of service they experience. Therefore, customer satisfaction is the prime driver of marketing
process. According to numerous thinkers, customer is the fundamental reason for the existence
of business (Drucker, 1973; Levitt, 1983). Moreover, there is enough evidence that the overall
performance of a firm is linked with customer satisfaction (Anderson, Fornell and Lehmann,
1992). In fact, the superior performance of world’s largest and reputed organizations like Ford,
General Motors, Nestle, Pepsi, Cola, Proctor & Gamble, GE, Microsoft, etc. is largely attributed
to the quality of products/services they offer to their customers.
Banking being a service based sector is largely affected by the quality of service offered.
Moreover, with the entry barriers relaxed, we can notice increasing competition in the Indian
banking industry. The more focused private sector banks, both domestic and foreign, are
spreading their wings in the urban areas and metropolis aggressively. Innovative and diversified
products and sophisticated information technology and better customer relationship management
practices are the strengths which are providing edge to a bank over others. In nutshell, assuring
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service quality to clients seems to have become all the more important for existence, growth and
differential advantage over their competitors for every bank in India irrespective of their
ownership pattern & size. A review of recent literature, noticeably by Lee and Hing (1995),
Steven, et. Al (1995), John and Tyas (1996), Oh and Jeong (1996), Sesha Sai (1999), Harsh
(2001), Simla and Swain (2002) and Mushtaq (2003) suggests that customer satisfaction is
important because it directly linked to return behaviour. Therefore, to achieve the service
excellence, banks must strive for ‘Zero defections’, retaining every customer that the company
can profitably serve. ‘Zero defections’ require continuous efforts to improve the quality of the
service delivery system.
However, quality cannot be improved unless it is measured. Hence, service quality trends, today,
play an important role in service organizations because excellent service quality is not an
optional competitive strategy which may or may not be adopted to differentiate one service
organization from another, but it becomes essential to corporate profitability and survival.
Scheme of Paper
The present paper has been divided into six sections. After the introduction, section II reviews
some related studies. Section III fixes some research objectives, hypothesis, highlights the
research methodology and the data base. Section IV is devoted to the results and discussion.
Section V gives some recommendations to enhance the service quality in banking industry,
implications of the study, limitations of the study and future areas for comprehensive research
and last section concludes the paper.
II. Review of Literature
For identifying the research gap sought to be bridged by the study, the existing literature on the
subject is being reviewed in the following manner.
Lytle and Mokwa (1992) & Parasuraman (1988) a consumer is satisfied if the service quality
conforms to his needs and requirements. The greater the service conformance to the requirements
of the consumers, the better is the service quality and consequently the greater will be the
consumer satisfaction.
Bolton & Drew (1987) and Ostwald (1998) observed that consumer satisfaction was strongly
related to quality and service quality was a pre-requisite of consumer satisfaction.
Buzzle and Gale (1987) revealed that in the long-run, the most important single factor affecting a
business firm’s performance is the quality of its products and services, relative to those of its
competitors.
Bolton and Drew (1988); Zeithaml (1998) perceived quality is an important measure in
influencing the consumers’ value perception and in affecting the intention to purchase products
or services.
Gronroos (1982) had identified two service quality dimensions, viz., functional quality and
technical quality. Functional quality represents the perception of the manner in which the services
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are delivered. Technical quality or outcome quality on the other hand, represents the outcome of
the service act or what the customer receives in the end (Brady and Cronin, 2001).
Smith (1987) claimed that satisfaction with service is related to confirmation or disconformation
of expectation.
Lewis (1991) service quality is considered as a measure of how well the service delivered
matches customer’s expectations or providing the customer with what he wants, when he wants
it, and at acceptable cost, within the operating constraints of the business. Providing a better
service than the customer expects.
Kotler (2006) the recent trend in many service organizations is to consider service quality as a
critical factor enabling them to achieve a differential advantage over their competitors.
Albrecht and Zemke (1985) Organizations which are becoming leaders in service quality are
characterized by the commitment of the top management and a corporate culture that encourages
a focus on customer and quality throughout the company.
Ammayya (1996) suggested the adoption of modern banking technology as a means to improve
customer services.
Gurney (1999) with ever escalating customer expectations, companies have to offer additional
values to make an ever-lasting impression in the minds of customers, because merely delivery of
satisfaction as the confirmation of expectations is considered as minimum threshold. Hence, it is
important for business managers to understand the provisions, symbols and tangible clues used
by the customers in evaluating the service offered by business organizations. Quality is thus
relative and subjective and depends on the perceptions and expectations of the customer with
respect to the service offered.
Levitt (1981) proposed that customers use appearances to make judgments about realities. The
less tangible a product is the more powerful shall be the effect of packaging while judging that
product.
Berry (1980) argued that due to intangible nature of services, customers use elements associated
with the physical environment when evaluating service quality. Managing the evidence and using
the environmental psychology are often seen as important marketing tools.
Heskett, et al. (1990) observed that across a wide range of business, the pattern is the same: the
longer a company keeps a customer, the more money it stands to make. The cost of poor quality,
on the other hand, relates to the lack of responsiveness to the customer, dissatisfied customers,
complaints and adverse word-of-mouth communications and dissatisfied employees (Crosby,
1979; Goodman, et al., 1986).
Research Gap
The review of literature exhibits that no comprehensive study has been conducted regarding the
gap between desirability and availability of banking services, their reputation, technology,
pricing pattern and location of the bank. The present study is directed to know the extent of gap
between desirability and availability of banking services and some recommendations are
prepared to bridge this gap.
III. Objectives, Research Methodology & Data Base
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Objectives
To study the perceptions of bank customers regarding the desirability of banking services.
To study the perceptions of bank customers regarding the availability of banking services.
To explore the gap in the perceptions of bank customers of these banks regarding the
desirability and availability of banking services.
Hypothesis
There is no difference in the perceptions of respondents of three bank groups regarding the
desirability of banking services.
Similarly, there is no difference in the perceptions of respondents of three bank groups
regarding the availability of banking services.
Research Methodology
In the light of aforesaid objectives and hypothesis, an instrument was developed to collect
information on desirability of bank customers regarding reputation, services, technology, pricing
pattern and location of a bank. Similarly, information is collected regarding the availability of
above said aspects.
The present study was conducted in the Ludhiana district of Punjab in October, 2008. The study
is restricted to three banks with one each from the public sector, private sector and foreign banks.
The public sector bank taken for study is State Bank of India (SBI), which is the largest bank in
India. The private sector bank is ICICI bank. It is one of the leading banks in the private sector
and it has been rated the best bank in terms of service quality by a recent survey of Money
Outlook. Foreign bank is Citi bank. The sample of the study comprises 1200 bank customers. For
data collection, the respondents were selected with the help of an abridged list of random
numbers. All important demographic characteristics like age, education and profession of the
respondents are taken into consideration.
Likert type five point scale was used to know the desirability and availability of the banking
services. Various statistical methods like percentage, standard deviation, coefficient of variation
and weighted average score were used to compare the results. To test the hypothesis, chi^ test is
used.
Parameters of Study
1. Service
(a) Simple & short Procedure
(b) Co-operative Staff
2. Reputation
(a) Excellent Credit Rating
(b) Strong Financial Position
3. Performance
(a) Security
(b) Service Speed
4. Technology
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(a) ATM
(b) Smart Cards
(c) I-banking
(d) M-banking
(e) Tele-banking
5. Price Pattern
(a) Minimum Opening Account
(b) Minimum Service Charges
6. Location
(a) Near to Important Place
7. Overall-Satisfaction
Data Base
Field Survey conducted in the month of October, 2008 at Ludhiana district of Punjab.
IV. Socio-Economic Profile of Customers
In the present study, the main focus of analysis is on service quality in banking industry.
Opinions of three bank group customers have been calculated separately. The total sample
survey of 1200 customers has been taken into consideration (Table1).
Table 1: Socio-Economic Profile of Customers
Group Number
N=1200
%
Bank Type
1. G-I
2. G-II
3. G-III
400
400
400
33.33
33.33
33.33
Present Age
1. Upto 25
2. 26-35
3. 36-45
4. 45-55
5. Above 55
296
476
220
168
40
24.67
39.67
18.33
14.00
3.33
Occupation
1. Service
2. Business
3. Industry
4. Agriculture
5. Professional
6. Others
380
304
272
16
16
212
31.67
25.33
22.67
1.33
1.33
17.67
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Education
1.Matriculate
2. Graduate
3. Post Grad.
4. Professional
116
408
444
232
9.67
34.00
37.00
19.33
Total 1200 100.00
Source: Field Survey
G-I: Public Sector Banks, G-II: Private Sector, G-III: Foreign Banks
Further these respondents are equally divided into three bank groups i.e. public sector banks (G-
I), private sector banks (G-II) & foreign banks (G-III). Among these customers, 37 pc customers
are post-graduate & similarly 40 pc are the youngsters. Service class and business class
dominates in the respondents. The sampled respondents are divided as per the pattern mentioned
in table 1.
Results and Discussion
(a) Perceptions of Bank Customers Regarding the Desirability of Banking Services
Regarding the services of a bank, 75.67 pc customers want that the various procedures of a bank
should be simple and easy because in a country like India, majority of customers are illiterate or
less educated (Table 2). They are unable to understand the various intricacies of procedures to
avail any banking service. Therefore, it is necessary that the procedure to open a new account,
issue of ATM, Debit/Credit card, etc. should be simple, short and easy. Further, same percentage
of customers desired that the bank employees should be co-operative and polite. They desired
that the bank employees should serve them with smile on their face.
Regarding the reputation of a bank, 83 pc and 64.33 pc respondents responded that they will go
for a bank which has strong financial position and excellent credit facilities as compared to other
banks. Now-a-days, banks are providing uncountable services to their customers. But with the
availability of products, high speed service is also desirable. Nearly 74 pc customers desired that
the banks should provide high speed services because it directly affects their satisfaction. Banks
have provided their customers the facility of any time and anywhere banking. But the security of
customers’ assets availing these services is also the responsibility of banks. About 74.33 pc
customers have desired the security of their assets and identity.
Present age is a e-age. In this age customers have become more conscious and demanding. They
go for a service provider who provides services well equipped with latest technology. E-banking
represents this e-age. E-banking provides services through various e-channels like ATM, smart
cards, internet banking, mobile banking, etc. Nearly 88 pc of respondents desired that all banks
whether it is public or private should provide the facility of ATM cards. Similarly, for smart
cards, majority of respondents (57.50 pc) have shown their desirability. Nearly 63 pc, 59 pc and
57 pc customers have desired internet, mobile and tele-banking services in their banks.
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Regarding the pricing pattern of banks, 72 pc customers highly desired that the banks should
keep minimum amount for opening an account.
Table 2: Perceptions Regarding Desirability of Banking Services
(Per cent)
Parameters Ab.Unnec. Unnec. Some
what
Desirable Highly Dis. WAS
Service
1. Simple & short
Procedure
2. Co-operative
Staff
2.33
-
0.67
2.67
4.33
3.67
17.00
18.00
75.67
75.67
1.63
1.67
Reputation
1. Excellent Credit
Rating
2. Strong Financial
Position
-
1.67
0.33
0.33
9.00
1.33
26.33
13.67
64.33
83.00
1.55
1.76
Performance
1. Security
2. Service Speed
1.67
1.67
2.00
1.67
3.33
3.00
18.67
20.00
74.33
73.67
1.62
1.62
Technology
1. ATM
2. Smart Cards
3. I-banking
4. M-banking
5. Tele-banking
1.33
0.33
-
2.00
0.67
0.33
1.33
1.00
1.67
4.00
4.33
6.17
7.00
6.00
10.33
6.67
34.67
29.33
31.33
28.33
87.33
57.50
62.67
59.00
56.67
1.78
1.48
1.54
1.44
1.36
Price Pattern
1. Min. Opening
Account
2. Min. Service
Charges
0.33
1.33
1.67
2.00
5.67
14.00
20.33
22.67
72.00
60.00
1.62
1.38
Location
Near to Important
Place
-
2.00
13.00
33.67
51.33
1.34
Overall-Satisf. 2.00 1.33 7.00 21.67 68.00 1.52
Source: Field Survey Results
Note: Ab.Unnec.-Absolutely Unnecessary, Dis.-Desirable, Satisf.-Satisfaction
Similarly, 82.67 pc customers are of opinion that banks should keep minimum charges for
products and services offered. About the location of the bank 85 pc customers opined that banks,
particularly, ATM machines should be near to important place like hospitals, schools, colleges,
shopping centers, etc.
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Overall satisfaction of a customer from his bank is very necessary because it directly affects the
reputation of a bank. About 89.67 pc customers are satisfied by the overall services, performance
and service quality of the bank.
In case of all parameters under study WAS is greater than one which indicates that bank
customers have shown high desire about these services in their banks.
(b) Perceptions of Bank Customers Regarding the Availability of Banking Services
Although 92.67 pc respondents desired simple and short procedure of banks but only 48.33 pc
customers responded that banks have short and easy procedures (Table 3). Further only 51.34 pc
customers are satisfied from bank employees. Regarding the reputation of banks, 79.67 pc
customers responded that their banks have strong financial position in the market. To study the
performance of a bank, we have taken security and service speed of a bank and for the
availability of both parameters 70 pc and 69.66 pc customers respectively agree. Every customer
wants that his bank should be technically sound. Regarding the availability of ATMs, smart
cards, I-banking, M-banking and Tele-banking 84.34, 49.33, 43, 40.33 and 39.66 pc customers
respectively agree. Regarding the price pattern of a bank, except 64 pc and 44.66 pc customers,
all other complained that banks have adopted high pricing pattern. Nearly 77 pc customers are
satisfied by the location of banks. Although majority of customers are satisfied by the overall
services of banks but this majority is not sufficient to keep the banking industry on top in service
level. Weighted average score in case of all parameters is less than one except location and
financial position of the banks which indicates that except these two parameters, customers are
dissatisfied by the banking services.
Table 3: Perceptions Regarding Availability of Banking Services
(Per cent)
Parameters Not at all Not
Avail.
Some
what
Avail. Highly Avail. WAS
Service
1. Simple & short
Procedure
2. Co-operative
Staff
0.33
1.00
20.67
16.33
30.67
31.33
37.00
36.67
11.33
14.67
0.38
0.48
Reputation
1. Excellent Credit
Rating
2. Strong Financial
Position
3.33
-
9.00
-
13.33
20.33
38.00
30.00
36.33
49.67
0.95
1.29
Performance
1. Security
2. Service Speed
0.67
4.67
6.33
3.00
23.00
18.67
51.67
56.33
18.33
17.33
0.81
0.79
Technology
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1. ATM
2. Smart Cards
3. I-banking
4. M-banking
5. Tele-banking
2.00
18.00
9.33
17.33
17.33
4.67
12.33
9.00
13.00
15.67
9.00
20.33
38.67
29.33
27.33
34.67
29.00
23.33
28.00
26.33
49.67
20.33
19.67
12.33
13.33
1.25
0.21
0.35
0.05
0.03
Price Pattern
1. Min. Opening
Account
2. Min. Service
Charges
1.00
2.67
12.33
28.33
22.67
24.33
45.00
29.33
19.00
15.33
0.69
0.26
Location
Near to Important
Place
-
4.33
19.00
40.33
36.33
1.09
Overall-Satisf. - 7.33 31.33 43.67 17.67 0.72
Source: Field Survey Results
Note: Avail. - Available, Satisf.-Satisfaction
(c) Perceptions regarding the gap between desirability and availability of banking services
Regarding simple & short procedure and co-operative staff, average gap is 1.247 and 1.257
respectively which indicates that customers are less satisfied by the services of banks which need
to be improved (Table 4). To judge the reputation of a bank we have taken excellent credit rating
and strong financial position of the bank. In both the cases, average gap is 0.587 and 0.467 which
indicated that customers are less satisfied from both the parameters of reputation. Security is the
major aspect that attracts a customer to join an organization but in this case, average gap is 0.797
which shows that customers feel less secure with banks. Similar is the case with service speed
where average gap is 0.837.
Table 4: Perceptions Regarding the Gap between Desirability and Availability of Banking
Services
Parameters Average SD CV
Service
1. Simple & short
Procedure
2. Co-operative
Staff
1.247
1.257
1.267
1.308
101.648
104.083
Reputation
1. Excellent Credit
Rating
2. Strong Financial
Position
0.587
0.467
1.292
1.047
220.220
224.290
Performance
1. Security
0.797
1.201
150.732
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2. Service Speed 0.837 1.106 132.196
Technology
1. ATM
2. Smart Cards
3. I-banking
4. M-banking
5. Tele-banking
0.530
1.250
1.187
1.387
1.337
1.087
1.611
1.395
1.634
1.668
205.169
128.851
117.530
117.848
124.813
Price Pattern
1. Min. Opening
Account
2. Min. Service
Charges
0.933
1.117
1.209
1.429
129.560
128.002
Location
Near to Important
Place
0.257
0.968
377.230
Overall-Satisf. 0.807 1.141 141.487
Source: Field Survey Results
In case of smart cards, I-banking, M-banking and Tele-banking, average gap is more than one
which indicates that customers are highly dissatisfied by these technical services of banks.
Although, in case of ATMs also, customers are less satisfied but average gap in this case is less
than one. Pricing pattern and location of banks are not exceptional cases. In both cases, average
gap is 0.933 and 0.257 respectively. Overall customers are less satisfied with the available
banking services. Coefficient of variation indicates that there is instability in the opinion of bank
customers regarding location of bank, availability of ATM cards, service speed, excellent credit
rating and overall satisfaction from a bank. But comparatively consistency is found in their
opinions in case of other aspects under study.
The present study vividly indicates that in the e-age, customers have become more concerned
about their time and money and have become more demanding. They highly desire excellent
services with quality and at low service charges. But the response of these customers regarding
the availability of excellent banking services is not satisfactory which has created a wider gap
between the desirability and availability of banking services.
V. Recommendations
The present paper attempts to give following recommendations for banks to bridge the gap
between the desirability and availability of banking services and to win the confidence of new
customers and to retain their old and valuable customers:
1. Banks should adopt simple and short procedure
In a country like India, where majority of customers are illiterate or less educated, it is necessary
that various bank procedures should be simple, short and easy. It will also help banks to win the
confidence of customers.
What type of problems will arise?
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problem of making simple and short procedure for divergent knowledge of customers in
India.
problem of covering the important information regarding customers.
language problem
Solution
bank management should take the initiative to make the banking procedures, like filling up a
form, instruction booklet, etc. should be simple and short.
only the important and necessary information related to customers should be covered.
bank forms, instruction booklet, etc. should be in regional language.
2. Bank employees should be of co-operative nature
A bank employee is the representative of that bank. Customers create picture about bank after
dealing with its employees because for customers they are not dealing with a person but with the
bank.
What type of problems will arise?
lack of training
problem of time
fear to keep the important information confidential
Solutions
banks should impart training to their employees
all the important information like interest rate, credit limit, etc. should be displayed in the
bank. It will help to decrease customer queries and thus, employees can spare more time to
serve customers.
frequent/continuous leave by bank employees should be avoided, since it disrupts the
corporate work.
3. Bank should have good reputation in the market
In this competitive age, customers have many options. Their area of choice is unlimited but
for banks market is limited. Therefore, to gain more customers, it is necessary for all banks,
whether it is public sector, private sector or foreign banks, to have good reputation in the
market. Because customers will go for a bank that has good reputation in terms financial
position, credit facilities, etc.
Solutions
banks should have strong financial position in the market.
banks should provide more credit facilities to their customers with fewer formalities.
4. Banks should provide correct and speedy services
Generally in case of public sector banks the time taken for processing and sanctioning of
loans is on high side (ranging from 15 days to 2 months). But in this global age, no one has
time to wait. Therefore, banks should provide speedy services to their customers. Further,
some kinds of mistakes like omitting entries, wrong debits/credits, over printing in pass book
sheets, wrong foreign exchange calculations, etc. should be avoided by bankers.
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Solutions
bank management should set minimum time limit for completion of a request.
penalties should be levied on employees in case of mistakes mentioned above.
5. Banks should ensure security to their customers
Now-a-day, banks have facilitated their customers in terms of many products and services.
Therefore, the security of their customers availing these facilities is also the responsibility of
that bank. A customer will prefer to join only that bank which he consider as secure. Not so
long ago, when e-banking still gaining foothold in India, there was a case of fraud in Europe,
where a clerk had siphoned off small change from different accounts and transactions into his
personal account, and this practice had continued over several months before he was caught.
These types of news loose the confidence of customers in banking industry. Therefore, banks
should pay more emphasis on the security of their customers.
Solutions
bank management should give strict instruction to their employees not to disclose
identity of their customers at any cost.
6. Banks should offer more technical advance services
In today’s fast changing environment, it is impossible to isolate banking and technology from
each other. In this e-age, customers also have become more demanding. Therefore, to remain in
competition, it is necessary for all bank groups (especially the public sector) to provide more and
more e-channels.
What type of problems will arise?
problem of finance
Solution
investment in technology is like ‘sow little reaps better’. Therefore, banks should invest some
part of their profits in technology.
7. Banks should keep minimum charges for their products and services
Bank customers are of opinion that banks charge high prices for their products and services.
This impression is more for private sector banks. Therefore, all banks, particularly the private
sector banks should work in this direction.
Solution
reduction in DD charges (by 50 pc) and interest rates (ranging from 0.25 to 1 pc) can be used
as an effective strategy to attract new customers and to retain old ones.
apart from this, bank customers also consider the ledger folio charges, godown inspection
charges, L/C opening charges, processing charges, etc., before opening an account with the
bank. Reduction in these charges (ranging from 0.20 to 0.75 pc) can also attract the new
customer towards the bank.
8. Banks should locate near to important place
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While choosing a bank, customers also consider the location of that bank. They will go for a
bank which is easily accessible. Therefore, it is necessary that banks should locate near to
important place like schools, colleges, hospitals, shopping centers, etc.
9. Overall-Satisfaction
Overall satisfaction of a customer from his bank is very necessary because this is the only
factor that helps any organization to increase its business because a delighted customer will
give you one more customer but an unhappy customer will curtail your 10 customers.
Thus, it is expected that if all bank groups add quality to their work their business can further
be multiplied because in the e-age, customers judge an organization not only by the number
of products offered by it but by the quality of that products and services. Same is for banking
industry because ‘quality counts in services too’.
Implications
The analysis vividly indicates a widening gap between the desirability and availability of
banking services in banking industry. This gap between desirability and availability is an
alarming bell for some banks, particularly, the public sector banks. Because service quality is
very poor in banks and it is below the expectations of customers. It is on the crossroads in the
competitive environment and this is the reason the customers are shifting from public sector
banks to new private sector and foreign banks and the survival of public sector banks is in
danger. Therefore, the bridging of this gap is the need of the hour. The analysis of this study is
very useful for the banking industry as well as for other organizations.
Limitations
Due to the problem of space, separate analysis of responses gender-wise, age-wise,
occupation-wise and bank group wise has not been shown in the paper.
Due to the same reason, chi^ test is not shown in the analysis.
Only three banks working in Ludhiana are taken due to shortage of time.
The analysis is based on the responses of customers.
Future Comprehensive Research Direction
Perceptions of bank employees regarding banking products and services.
Perceptions of bank employees about bank management and their customers.
Comparative study of perceptions of Indian bank customers with the foreign bank customers
regarding banking services.
VI. Conclusion
With the steep rise in level of awareness and expectations of the customers, their desires
regarding efficiency, service quality and reputation of the bank have been altered, which has put
pressure on the bankers (especially the public sector banks) for developing desired skills,
sensitivity and perceptions to understand customer expectations and needs in the changing
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scenario. Therefore, in order to achieve service excellence and to bridge the widening gap
between the desirability and availability of banking services, banks need to think ‘out-of-the-
box’ where the box is a representation of all the tested and tried things that always worked in the
past. They have to think outside the boundaries of current practices, products, services,
organizations and industries.
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Linguistic and Social Impediments to Oral Fluency and the Speaking Skill
of Students at College of Business Administration – Kuwait University
Ahmad Ali Sahiouni
Kuwait International Law School
Abstract This paper tackles the social hindrances that impede the oral communicating process in English for the students of
the college of business administration at Kuwait University. Three sub-skills have been examined in the process of
the speaking skill; namely, pronunciation, intonation, and stress. The researcher also examined the socio influence
on both strength and weakness in the speaking skill for the targeted students. In addition, this research focuses on how grammar is influential in conveying ideas and expressing opinions and attitudes; how it is difficult to initiate
opening declarative and interrogative statements to build up convenient communication process in academic and
social environments. Moreover, the researcher tackled the issue of social interaction in academic arena and
simultaneously retains the sense of identity as well as students’ abilities to explain certain situations and easily
offering appropriate comments on such situations. The researcher explores the possible socio implements that
hinder students from socially respond to social stimuli in English. The researcher suggests some recommendations
to cure the deficiencies found in oral proficiency students of the college of business administration encounter. He
believes that effective communication should be the fruit of the development of communication patters based on
expectations as well responses to other speakers in order to be effectively orally responsive to certain experiences.
Keywords: [Linguistic & Social Impediments, Oral Fluency, Speaking Skill, Business Administration]
Introduction
Second language learners suffer from the speaking skill because it gives them the feeling of
default every time they practice language. However, the importance of English worldwide makes
it an inevitable medium of communication in many countries of the world. From a
communicative perspective, the speaking skill makes up an inevitable part of learning a foreign
language. The speaking skill, moreover, is an effective means to measure a learner’s competence
in any language, Bruce H. (2007). The researcher found that a significant number of the targeted
students wish to easily and smoothly communicate in English. What the researcher noticed is the
obvious weakness of students in the speaking skill though they have much more competency in
other language components, such as reading, writing, and listening. Such weakness, according to
the researcher, is a reflection of students’ general low level in English. This is because the
speaking skill, as well as writing, imposes serious challenges to second language learners as
these skills are productive skills. Actually, a number of linguistic factors affect this issue.
According to Dawn D. (2010), acquiring articulator fluency in multi-word utterances is one of
the obstacles facing even advanced non-native speakers of English. Students showed a
considerable skill in pronouncing separate words in isolation of their context, but when the
students tried to make clauses, phrases, or sentences, they started to hesitate, stumble and
sometimes were distorted. Hence, it has been noticed that enhancing oral fluency is a real
challenge to improve learning a second language. The researcher concludes that since students
are mainly monolingual, and have just little or no exposure to English – as most of them use
Arabic outside classrooms, with just few exceptions – their oral fluency is not up to the required
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standard. It has been agreed that fluency in language is no more than a habit or practice of
language as a result of rich reservoir of lexical items as well as grammatical structures and rules.
Consequently, some linguists, such as Lightbown P., & Spada N. (2003), think that “when
students use English to speak out their thoughts, attitudes, and reactions, they face the difficulty
of knitting their inner lingual outcome into correct homogeneous series of statements". Such
students can usually produce stumbling speech full of errors and pauses due to many factors:
first, students have no lingual components. Second, instead of thinking and uttering words in
English, students translate from their first language, Arabic, to the target language, English.
Third, students rarely practice speaking English outside classrooms. Fourth, the educational level
of the students and their gender play a role in their speaking abilities, especially in social context.
However, this research paper tackles the socio causes influencing the majority of students to
display their ability to acquire oral fluency in English. Finally, the researcher focuses on the
factors that enhance oral fluency, and they diagnose the socio obstacles that slow down any
development in the speaking skill.
Addressing the Problem
English is currently enjoying a prominent status worldwide. It is the main or second language in
many fundamental domains of life. There are numerous reasons behind this high status of
English. As a result, English has become communicatively a basic requirement for
communication. Speakers of English as a second language believe that mastering English in
communication is a clear reflection on their unique personality, Harmer J. (2001). This research
paper focuses on proficiency impediments as well as the convenient tools that might help
overcome such hindrances.
Questions of the Study
Many questions with regard to oral fluency and speaking tackled in this paper go as follows.
1- What are the social reasons that make the speaking skill lag behind in comparison to other
language skills?
2 - What are the main reasons behind the weakness in the speaking skill?
3 - How can the problem of speaking weakness be solved?
Importance of the Research
The focus of this paper is direct investigation of the social influence of oral fluency on the students
of the college of business administration – Kuwait University. Another fundamental issue in this
paper is attributed to the different linguistic and cultural backgrounds of the students. This paper
receives special significance from the investigation of speech mechanisms resulting while students
learn to speak in somehow less socially stressful environments.
Definition of Oral Fluency
Fluency is a commonly used notion in foreign language teaching, frequently contrasted with
accuracy especially in a communicative language teaching. In ordinary life it often has an
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extended meaning and is used as a synonym of overall oral proficiency. On the contrary, in the
assessment of foreign language proficiency, it is one of several descriptors of oral performance.
However, there is a clear interconnection between the four language skills, reading, writing,
speaking, and listening. For language learners to become proficient enough in language, they
need to develop all the four skills with special care assigned to speaking, Helen N. (2009). Oral
fluency measures how language learners are able to translate their inner ideas into words and
meaningful well-organized and well-connected sentences. It is important for language learners to
master pronunciation of separate sounds and words to improve fluency. In other words, the
listener has to be able to understand and distinguish between the individual utterances of
language learners, (Aloia.S.et. all, 1996).On one hand, when students want to create either single
words or word combinations in any form – like phrases, clauses, or sentences – they need to use
stress, rhythm, and intonation to make their utterances comprehensible to the listener. On the
other hand, in order to master the fundamental aspects of fluency, language learners need to
know both grammar, which is the structure of language, and vocabulary, which constitutes the
basic building blocks of language, Ur P. (1996).
One way to improve one’s speaking skill is to enhance the listening skill. The speaking process
goes in two directions: first, the speaker should be able to accurately convey his message in
order to be understood; second, the speaker should be able to listen well in order to understand
what other speakers say, Dawn D. (2010). Therefore, good listening skills are essential for oral
fluency. Another way to improve the speaking skill is to make a form of marriage between the
listening and reading skills, Dawn D. (2010). As a result, speaking is the naturally-performed
action used to draw attention, display feelings, express and share ideas and thoughts with others.
Nevertheless, the main interest of second language learners is to speak out these functions. The
basic environment of practicing these functions is academic, as learners are expected to perform
this action smoothly and coherently. In this sense, the researcher comments that the students of
the college of business administration – Kuwait University explicitly show their interest to
speak English fluently. Yet, they bitterly endeavor to orally react in situational English.
Speaking is inevitable for learners of English as a second language in their daily life as well as
basic life needs, such as job interviews, talking to an audience unrehearsed, taking an oral test,
and socializing. According to Helen, N. (2009), English learners acquire self-confidence, pride,
and self-satisfaction when they become competent in English.
The Importance of Oral Fluency
Thanks to globalization, the need to communicate in a different language has become more
important than it has been in history. Accordingly, language learning theories as well as teaching
methods and techniques have been developed. Therefore, language learning requires
comprehensive interest with extra focus on the active language skill of speaking or oral fluency
whether academically or socially. Globalization or internationalization adopted English as its
main medium of oral communication worldwide. As a result, English teaching methods are
directed to enhance oral communication, Grander R.C. & W. E. Lambert (1972). When language
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learners suffer from deficiency in speaking, there seems to be some pedagogic discrepancy in
the teaching process as a whole. The researcher stresses that to avoid such unwanted outcomes,
it is essential to practice English in the classroom. They argue that in-class oral activities require
more use of English by both students and teachers, especially Arabic-speaking teachers. In this
concern, it is the responsibility of the English teachers to speak English in class to the utmost
possible rate because they are the main source of language input, and at the same time teachers
should restrain the use of Arabic to the minimum in order to give the students the chance to
practice English.
Due to oil boom since the 1970s, people from more than a hundred nationalities have been
attracted to Kuwait for work in different fields of life (statistics of the Planning Authority in
2012). As a result, the need for English fluency – whether academically or socially – especially
speaking, is mounting for both university students and Kuwaiti citizens. The inevitable
mandatory necessity of speaking capabilities as well as oral fluency, moreover, is undoubtedly
very essential not only for students of the college of business administration – Kuwait
University, but also for Kuwaitis at a larger scale. This is because – according to the statistics of
the Planning Authority in 2012 – there are workers from more than 120 different nationalities.
Hence, the main language used for everyday social, academic, and work communication is
English. However, the researcher noticed that the weakness in speaking skill is obvious in
relation to smoothness and correctness. The researcher attributes this deficiency to a couple of
reasons: the linguistic reason is related to the idea that the foreigners working in Kuwait
originally come from non-native English speaking countries, so that their pronunciation is
widely influenced by their first language; while the social reason is attributed to the fact that a
significant number of such workers are uneducated, and many of whom never went to school.
Therefore, the English they have acquired mainly comes from their contact with others including
Kuwaitis, leading to inconvenient fluency and inaccurate pronunciation, and misunderstanding.
A masterpiece of literature might be deformed and become dulled if it is poorly presented due to
the deficiency in oral fluency. In general, communication can be achieved mostly in speaking.
The interpretation of this fact is attributed to the fact that fluency is a productive skill in oral
style. However, speaking competency is more complicated than it seems because it involves
more than just pronouncing or uttering words. According to Bruce H. (2007), oral fluency falls
in three speaking domains; namely, interactive, non-interactive, and partially interactive. The
first type of oral fluency involves face-to-face conversation and talks by which the listening and
speaking skills are alternatively practiced. In addition, the speakers can exchange ideas,
thoughts, and opinions. On the other hand, the non-interactive fluency does not fall in many
cases. This kind of fluency involves audience, as the material is totally recorded on electronic
devices and directed to unseen audience. The third domain of oral fluency is one-way because
the receiver just listens without any involvement in speaking. Hence fluency capability is
obvious, and requires more influence and attractions to draw the attention of the listeners to
impress them. English language users are supported by definite assistance to reflect their
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attitudes, opinion, descriptions and feeling.
From linguistic perspective, Loonstra A., Tarlow A., & Sellers A. (2001) argue that coherent
fluency derivative expands positively, and promotes the negotiation skills of language users as
well as self-confidence and oral capabilities. As a result, the speaker feels more comfortable
when addressing a larger audience with more confidence. However, dexterity in oral fluency
mounts up by the passage of time if language is practiced at length, leading to accrediting the
speaker particular integrity.
Oral fluency is a powerful tool that helps speakers deliver messages clearly and coherently,
persuade other listeners, direct a situation, react or describe an event. The findings the researcher
comes with have shown that language learners bitterly strive to enhance their speaking
competency to a standard that enables them to master oral communication. When asked, all
students stressed that the ability to speak coherently and confidently will definitely draw the
attention of the listeners. It has been noticed that language speakers feel comfortable from the
language tough meaning. However, the necessity for proficient oral fluency can be viewed as
accurate if lexical items are correctly-delivered in presentation to convey an effective and
meaningful message. In general, some language teachers believe that oral fluency is very
familiar and comprehensible skill because it conveys messages in different ways. The researcher
confirms that contrary to what many people think it is difficult to address crowds fluently and
effectively. In relation to the sample students under study, the researcher noticed that although
students under study show good command of English as a whole, some feel confused, and even
become panic, when it comes to public speaking and social communication, such as delivering
presentations. The students find it boring to translate their thoughts into sentences, and utter
them loudly in front of an audience. The researcher noticed that students frequently stumble;
consequently, he stresses on the students whom he should constantly improve their verbal
capability via continuous practice if they want their oral fluency to be developed. The sample
students believe that excellent oral fluency is the ability to speak well in and out campus. They
claim that mastering speaking is important for both their academic studies and future job
opportunities. Therefore, Gruenewald P. and Lockhead G. (1999) believe that it is, and will
always be, well-worth the effort in completely maintaining and developing their social linguistic
capabilities. The students admit that speaking smoothly offers the well-roundedness they are
looking for. Thereby, they can get rid of difficulties like inhibition, uneven participation, and the
use of Arabic.
Socio Perceptions of Oral Fluency Deficiency When Learning English
Among second languages being learnt in the developing countries English enjoys the highest
prominent status. As a result, people, especially the educated, eagerly try to master English as a
second language, or to master it even like native speakers in order to both academically and
socially use it. English has become the main medium of instruction in many academic
institutions, so that students need to work hard to learn English with specific focus on the
speaking skill in order to freely and openly be able to communicate with others, whether in class
or daily life. From linguistic view point, Harmer J. (2007) argues that language learners are
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believed to be fluent if they can perfectly utilize its structure meanwhile focusing on content
rather than form. Based on the situation he is involved in, the researcher ought to utilize the
patterns, forms and units at ordinary speaking speed. According to the researcher, the term
“fluency” is closely related to the spontaneous, non-stop, and automatic flow of speech rather
than to speed. He emphasizes on the students to seek acquiring social skills as well as linguistic
abilities to become efficient communicators in English. According to the researcher, the link
between speech and context formulates the corner stone for performing meaningful speech.
Therefore, he suggests four aspects of competence linked with “fluency” represented as follows:
It is unlikely that language experts pay enough attention to analyze the oral fluency proficiency
of English as a second language. Due to the fact that students of the college of business
administration suffer from deficiencies in the speaking skill as well as oral communication, the
researcher tackled the speaking component. The researcher argues that the faculty students
encounter problems related to (1) language form, i.e. syntax, structure, and sound; (2) language
content, i.e. meaning or semantics; and (3) pragmatics, i.e. communication. These three main
deficiencies formulate a great influence on students' oral capacity, PrescottT.et all (2006).
The researcher noticed that the spoken English of the students of the college of business
administration in Kuwait University is in its worst condition. After spending twelve years of
schooling, the students still lag behind in their spoken language proficiency; their level is below
the target level. There are three reasons, the researcher claims, attributed to the speaking
deficiency: first, language is restricted to classrooms as students rarely use English outside
school. The result is lack of practice and abundant exposure, leading to social inability to
communicate. Second, language teachers allocate more time to other language components or
skills rather than speaking. The problem with the speaking skill is that it is not evaluated in the
exams like other components, such as writing, grammar, vocabulary, and reading. Third,
speaking is totally neglected in the credit exams. Consequently, students study English for one
purpose only, which is passing the final exams because assessment is based on written exams
Fluency
Dexterity in using language
imaginatively and creatively
Brightness of using
coherent, logical,
semantically flow of
sentences
Ability to narrate
utterances continuously
with limited breathtaking
pauses
Skill of expressing ideas
or describing situations
contextually
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rather than oral ones. The result is poor social function of language.
Although the students of the college of business administration experienced a great deal of
language – such as syntactic structures, verb tenses and patterns – in their school years, they , as
cognitively mature learners, still suffer when they want to express their attitudes orally, Storm,
C. (2010). The researcher argues that the students' communicative abilities are unlikely
reproduced from the scheduled presentation offered by the instructional material and the
assigned curricula. This means that the students are socially and linguistically incapable of
implementing the language they have learnt at their faculty in their everyday life. Therefore,
since it has been supposed that the principle language learning objective is producing fluent
speech rather than stumble utterances by frequent pauses and hesitations, constant practice and
language use can develop fluency. Hence, fluency talent is not an absolute dogma students
should acquire skillfully or not, rather, it is a degree-based competence. In other words, students
are responsible for achieving some degree of fluency, Larsen-Freeman D and M. H. Long
(1990).The researcher notices that the students of the college of business administration –
Kuwait University are worried about their fluency capabilities in English as a second language.
As a result of these concerns, the students speak rather quickly without sufficient knowledge
because they just want to make up for it. Accordingly, native speakers find it difficult to
understand them. The researcher claims that the students of the college of business
administration endeavor hard to keep on with the lecturers as well as to speak fluent and correct
English. To give students self-confidence, the researcher keeps advising them to use spoken
English. The reason for this advice, according to Crowe S., & Prescott TJ (2003), is that English
is principally used for communicative purposes, i.e. English language function is transactional,
as key words are emphasized and repeated more slowly so that students become capable of
reusing them in similar situations. However, since language is a communication system it is
unlikely to be an easy task. Knowing that acquiring communication constitutes a major part of
learning a second language, the researcher focused on the fact that students may have different
thoughts in their mind, and they cannot voice them out in English. They try to express
something, but they feel they cannot stick ideas together. They have different words and images,
but they are floating and messing. In other words, students feel themselves helpless when it
comes to orally use English. Once a student initiates a sentence, the flow of ideas disappears,
and a blackout takes place in his/her head. The researcher refers to the idea that many students
have experienced some embarrassing situations, and they find themselves entangled, so they
switch to their mother tongue, Arabic. Three types of impediments obstructing students from
oral fluency, according to the researcher, are presented as follows:
1. Lack / shortage of rich vocabulary
2. Inability to express thoughts and convey messages
3. Difficulty of correct pronunciation
Forms of Oral Fluency Mistakes
The researcher interviewed fifty students of both genders, and from different social and
educational backgrounds. Experiment tools applied were pair dialogue, group dialogue,
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conversation, presentation, role-play discussions, and speaking sessions. The researcher
monitored the sample students while they performed the different oral activities in an
exchangeable manner.
The researcher noticed that 23% of the sample students inserted unnecessary literary and
culturally translated items from their mother tongue, Arabic. Among the most common errors the
researcher noticed, 26% of the sample, is the mispronunciation of words. Such errors are
attributed to inappropriate accumulative language instruction over the years. Moreover, Kuwaiti
students are negatively affected by the Arabic sounds when they speak English sounds. A plenty
of reversal mistakes, about 21% mainly related to the position of adjectives in the sentence, were
also reported. Again, Arabic leaves a great impact on students' use of grammar, especially with
the position of the adjective after the noun. Another form of errors, constituting 30% of the
sample students, is the omission of words. Furthermore, incomplete expressions are caused by
the shortage of vocabulary reservoir. Students, for shortage of sufficient wealth of vocabulary,
provide incomplete expressions. In addition, it has been noticed that the performance of female
students is higher than that of male students by approximately 22%. Regarding the educational
level of the parents, it has been noticed that students whose parents are master or doctorate
holders enjoy much better speaking capabilities both on the academic and social levels. This
category constitutes about 33%. It is well-known that the more exposure language learners have,
the better their language proficiency will be. This is applicable to the sample students under
study. It has been noticed that about 29% of students who have travel history to the UK or USA
have better speaking skill.
Problems Related to Structural Fluency
The researcher identified three types of difficulties that prevent speech smoothness. One
problem is represented in the over thinking of grammar rules, i.e. the sample students are
obsessed with the accuracy of the grammatical structures more than they do with the accuracy of
their oral structures. Excessive care about grammatical rules impedes the rhythm and tone of the
speakers and distracts them. The sample students usually recall grammar rules before producing
their sentences orally, leading to the slowdown of their pace of speech. Paradoxically, native
speakers are hardly familiar with English grammar although their spoken and communicative
English is grammatically correct; meanwhile many ESL learners are well-acquainted with
English grammar, sometimes more than native speakers, Mejias, H., R. L. Applbaum, S. J.
Applbaum and R.T. Trotter (1991). It is relatively easy for native speakers to understand
grammar rules, but they are not aware of the fact that such rules are off their minds in spite of
their ability to orally, linguistically, and socially communicate, listen, and read.
Moreover, the researcher noticed that many students have considerable amount of lexical items,
but they are incapable of creating sentences of their own out of these words because there is
deficiency in using phrases. For example, if a student has about one thousand separate words,
he/she might not be capable of uttering one correct sentence. On the other hand, according to
Troyer K. et al (1997), if the same student has a hundred phrases, he/she can create a
considerable number of correct sentences; consequently, such student will be considered an
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orally fluent English speaker. Therefore, the researcher repeatedly guides students to be well-
acquainted with phrases rather than compiling vocabulary if they want to be fluent English
speakers.
The second type of difficulties, however, is represented in the translation from the mother
tongue, Arabic. Such translations constitute serious impediment to fluency. Surprisingly, the
researcher was confident that the sample students used to literary translate what they want to say
from their mother tongue to the target language. Consequently, when the students wanted to
express their attitudes they frequently stuttered and committed large number of mistakes. The
justification of such difficulties in speaking, the researcher believes, is that the order of words in
the Arabic sentence is totally different from that of English. As a result, students desperately fall
in the trap and utter wrong staggering speech. Moreover, Arabic grammar is mixed with that of
English when students attempt to translate from Arabic before they speak in English. However,
the researcher keeps reminding students of the importance of learning how English sentence,
clause, and phrase are created.
Some English language learners believe that reading English and listening to English will
enhance their oral fluency. However, it is believed that promoting the speaking skill is the only
way to achieve fluency. For example, young children acquire their first language by speaking.
They first become fluent in speaking before they learn how to read and write, Harmer J (2007).
Therefore, the instinctive order of acquiring the components of any language are listening,
speaking, reading and writing. However, schools tackle the language skills differently: they
begin with reading, and then writing followed by listening. Speaking is the last language skill
schools focus on when teaching a foreign language. On the other hand, the researcher believes
that the order of learning a foreign language in school should correspond with the natural order
of learning the components of a foreign language, i.e. listening, speaking, reading, and then
writing. Thus, enhancing oral fluency starts with listening, enhanced by speaking, fortified by
reading and consecrated by writing. The reason that many students are better at reading and
listening than they are in speaking and writing is that they continuously perform reading and
listening in classrooms more than they do with the other two skills, McCroskey J. C. and V. P.
Richmond (1987) .
The third problem the researcher identified for the deficiency in speaking for the students of the
college of business administration is that they are not around English at all. In other words, they
are not exposed to English frequently, as the medium of instruction in their faculty is Arabic.
Students practice English in their English classrooms only for one to two hours a day, which is
not enough to master the speaking skill. However, there are some exceptions related to the
students who have more exposure to English in their social life by having travel history to
English-speaking countries. Another exception is attributed to the students whose parents have
their higher degrees from the UK or USA.
Speaking Fluency and Tension
Speaking and oral fluency are obviously two distinct things. All students of the sample showed
some form of speaking capability. Some students are relatively competent in speaking, but they
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are not fluent enough to express their attitudes smoothly and coherently. Some other students are
in the middle; their fluency standard is acceptable. They can also convey the messages they want
to convey, but not adequately enough. On the other hand, the researcher noticed that the passive
students are those whose fluency is not up to the required level, or not as it is supposed to be.
Those students produce incorrect and incoherent English. Again, gender, parents' educational
level and exposure play a decisive role in categorizing students. Female students, whose parents
have higher educational level and who have longer travel history to English-speaking countries,
have better performance than other students. Most of them are categorized in the first group.
Based on the previous findings, some persistent questions appear when analyzing the speaking
and oral fluency skills, such as:
a. To what extent is the student fluent?
b. How confident is he?
c. Does he promote himself convincingly and effectively?
d. Does he have the ability to speak spontaneously and automatically?
e. To what rate does his mother tongue influence his English speech?
In the course of his research study on a sample of students from the college of business
administration – Kuwait University, the researcher could also identify another deficiency in oral
fluency represented in "fluency tension". To understand this idea, tension should be defined.
According to Mak B. (2011), tension is a degree of anxiety, or worry about imminent predictable
thing, or fear from expressing oneself orally. Based on this definition, the researcher’s comment
can inhibit the ability of speaking as the sample students showed some form of tension or
Types of
Oral
Fluency
Fast
Fluency
Slow
Fluency Passive
Fluency
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nervousness that distracts them from focusing while speaking. In this research, some students
showed some kind of reluctance when they were asked to set for both an oral exam in the form
of a personal interview and to deliver a presentation for an audience. A significant number of the
sample students experiencing speaking tension remain calm rather than venturing of being
exposed to embarrassing situation when they are asked to perform oral activity. In an academic
environment, students suffering from fluency tension often display low level of self-confidence.
Such weak self-confidence makes the students keep silent even if they can express themselves,
Price L. M. (1991). The researcher, however, thinks that speaking anxiety and oral fluency
tension negatively leave an influence on language learning. He claims that tension is more likely
tied to special situations and circumstances that make the students feel uncomfortable as, for
example, delivering oral presentation in front of an audience like their colleagues. The researcher
distinguishes between three forms of oral fluency within the track of fluencytension
demonstrated in the following figure:
According to the researcher, students who are able to speak English confidently, correctly, and
flowingly are classified as fast fluent speakers of English. Such students are brilliant since early
stages. On the other hand, the researcher classified some students as slow speakers because they
speak hesitatingly, and intermittently. They also showed great deal of stammering and frequent
pauses. However, the slow speakers are capable to convey their ideas and thoughts. The last kind
of students is the passive students whose language is desperately poor. They are also non-
confident; their oral fluency is full of tension. Moreover, the slow students have some fear of
using English in public, or classrooms. It has been also noticed that student who received their
basic and secondary education in Arabic schools, whether public or private, have lower speaking
proficiency than those who have completed their school in English schools.
The sample students are distributed below on the three levels identified by the researcher after
carrying out oral activity, such as conversations, presentations, and dialogues:
Type of fluency Competence rate
Fast fluent students 21%
Slow fluent students 46%
Passive fluent students 33%
The findings show that about one fifth of the sample students is relatively competent or
professional in oral fluency. These students come from distinctive backgrounds, usually well-off
families. They frequently attend English language teaching courses abroad, mainly in the United
Kingdom and United States of America, and they are usually English school leavers. Since they
are exposed to English more frequently than the other two categories, the fast fluent students
have fast and effective rhythm, with tensionless English according to the common standards
valid in the college of business administration – Kuwait University. On the other hand, students
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who have never been to an English-speaking country, or whose parents are of no higher
education performed poorer level in speaking. Such students are not necessarily all better in all
English skills, but they are better at speaking. Female students have also better performance.
The second category the researcher identified constitutes the majority of the sample students,
almost half of the sample students. These students are competent: their oral fluency is medium
or not very high. They are able to cope with the situational and academic English, so that they
can express themselves in meaningful English. Most students under this category are females
and come from highly educated families, or English schools, or have considerable travel history.
On the other hand, the passive students represent a remarkable portion of the total number of the
students, one third of the total number of the sample students. Not only do the students under
this category suffer from accumulative weakness in oral fluency, but they also struggle in all
English skills. Their main interest in English does not exceed passing their exams in any means.
They do not show any interest to improve their language skills. These students are mostly males
and from families of good but not higher education, and very few of them have travelled to an
English-speaking country.
Reasons of Oral Fluency Tension
In reality, fluency tension is associated with fear, which is derived from past events. Kail R., and
Nippold M (2004), say that unmotivated students create weak communication if they do not
speak English since early stage. Moreover, keeping silent in learning in childhood restricts the
chances of developing oral fluency skills. In addition to schools' speaking skill development,
parents' behavior or reactions regarding outspokenness can leave great effect on children's future
oral fluency capabilities, Horwitz E.K., & D. J. Young (1991). Students of the college of
business administration – Kuwait University, who were not accustomed to speaking during early
stages of learning, were shocked with the requirements of the faculty regarding oral fluency.
Therefore, their inhibition often ends in silence and withdrawnness. These students are usually
Arabic school leavers.
The researcher identifies extra feature of the fluency tension. He believes that tense students are
self-conscious, so that they are sensitive of being subject to laughter by others. This case results
in the fear of speaking fluently, which is most likely related to exposure since the fear of
speaking is often instigated with the surrounding. The researcher keeps reminding the students
how complicated and difficult the speech process is; and how much effort it takes language
learners to master speaking of their own mother tongue, until they automatically produce Arabic
effectively and fluently. Nevertheless, the personality of the students is closely related to their
own peaking proficiency. Learner characteristics that have to do with one's personality are also
strongly connected to oral communication skills rather than acquisition of literacy or academic
skills.
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Tips for Speaking Skill Development
For English language learners, it is not a must to live in pure native English milieu to be fluent
in English, although it helps learners become more fluent in shorter time. In the highly
sophisticated electronic and media tools, it has become quite easy and available, even for free,
for every learner in almost every corner in the world to have easy access to English language
teaching programs. In addition, the most recent up-to-date electronic and media devices such as
iPad and MP3 have facilitated the access to original English material. Such devices and
programs create simulated English environment greatly helpful to any language learner wishing
to master English fluency. However, to master speaking, students need to repeat what they hear,
and read into systematic speech molds. Baldo V.et all (2006) believes that if students practice
listening and reading; they do not necessarily become fluent in speaking. Therefore, intensive
practice of speaking out loudly will certainly produce effortless smooth fluency.
The researcher claims that English language teachers should adhere to the use of English inside
the classroom in order for the students to be trained to use it outside the classroom as well. They
believe that to obtain reality and make speaking the second language a natural process it is
essential to assimilate language in every possible communicative circumstances. Moreover, the
researcher emphasizes on the fact that learning a foreign language necessitates improvements in
the means of communication. By using English in the classroom to the utmost, students have the
chance to utilize language in different contexts. Accordingly, the researcher keeps advising weak
students to improve their speaking skill competency. He recommends the students to:
1. practice saying English sounds individually and loudly.
2. be acquainted with the correct function of the words; gender, adjective, noun, etc.
3. increase their word bank.
4. be familiarized with many useful phrases and complete sentences that are used in every
day communication.
5. practice using words in the correct order.
6. speak out confidently without tension or hesitation.
7. train for fluency capability by addressing friends or family members in English
8. use modern electronic devices, such as Pad and MP3, or watch English programs to
increase their exposure to language.
The researcher, furthermore, thinks that students not only need mechanical procedures, as
mentioned above, but they also require learning English language, such as syntax, and grammar.
Consequently, it is fundamental for language learners to acquaint themselves with language
components, such as reading and writing. For example, when students read printed material in
English, they learn the regular conversational terms along with dictionary consultations, which
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will help them find out the meaning of the unfamiliar words in their first language. The
following step comes when the student becomes capable of catching English language in
general. The learners will start speaking even if they are not fluent enough yet. Fluency will
definitely come with frequent and consistent practice. In this concern, it is worth mentioning that
passive students are in need of building up oral communication with their fellow students in
English. They can also watch English programs and movies on either television or the Internet.
Such programs and movies offer the potential of enhancing the oral fluency of the students. On
the other hand, fluent students of the sample under study declared that they spent long time and
much effort to be familiar with the listening and communicating in English. There is response
time in the students' mind before they have to reply. Because students listened to English, their
minds are prepared to respond in English. The advanced step of enhancing the speaking skill is
built on making use of sophisticated electronic devices and media software, such as iPad and
PM3, which can offer audio tutorials for pronunciation, intonation, and conversational material.
In his other part of the argument, the researcher emphasizes the importance of the responsibility
of the instructors to elevate the speaking skill of the students. The researcher believes that it is
the responsibility of the English language teachers to be cautious or sensible as they introduce
the students to fluency and speaking topics. They should also take into account the individual
variances among students. Such variances spring from the lingual and social background of
students. As a result, the researcher recommends the following procedures to English language
instructors at the college of business administration – Kuwait University to adopt when tackling
the speaking skill and oral fluency:
a. Frequently initiate English environment in classrooms.
b.Adequately display the subject matter in an exciting situational manner
c.Persistently persuade passive students to take part in classroom discussions
d.Properly expand the techniques of the speaking skill
e.Repeatedly enhance students to launch open discussions on general topics
f. Appropriately implement the techniques of group work, pair work and role-play
g.Constantly steer and monitor students’ works
h.Skillfully encourage low-achieving students to carry out power point presentations
Conclusion
To assess the quality of language teaching, one should realize the portion and quality of Arab
students learning English. English language learners believe that unless they master speaking,
they will not be considered true learners. In summary, the researcher comes to some conclusions
pertaining oral fluency. The findings the researcher found concerning the major causes of the
deficiency in the speaking skill among the faculty of social students sciences – Kuwait
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University are accumulative weakness of teaching, implementation of wrong pedagogic
procedures, lack of practice, and much use of mother tongue in classrooms. Social background,
gender and parents' educational levels also play a role in classifying students in the speaking
skill. The researcher classified the difficulties the sample students suffer from when they speak.
In order to become proficient at oral fluency, the researcher recommended some remedial
procedures that may help English language learners in the college of business administration –
Kuwait University to enhance the speaking skill. Among these procedures are microinstructions
related to pronunciation and intonation as well as theatrical tips that teach the learner the
techniques of speech fluidity. In accordance with the findings the researcher collected out of the
experiments they performed on the participants of the sample, it has been confirmed that oral
fluency is a habit which can be acquired by continuous practice, persistent exercise, and
application of the speaking skill rules in real situations and attitudes.
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An Empirical Study on Calendar Anomalies in the Indian Stock Market
*Thilak Venkatesan & **Darshan Kumara. M *Assistant Professor, P.G. Commerce Department, Presidency College, Bangalore
**Student, M.Com, Presidency College, Bangalore
Abstract
The dynamic behavior of asset prices, particularly the stocks, deviate a large from their intrinsic values. This
rationale leads to the argument of market efficiency. The evidence from existing literature proves that market anomalies exists, which can aid in developing trading strategies. The various forms of anomalies were categorized
from the previous studies, and the present study was focused to investigate anomalies that exist in the Indian stock
market. The most popular indices, Nifty50 was used for the analysis. The trading volumes in the Nifty50 were also
considered to reflect the differences in the volume. This paper investigated the existence of the calendar anomalies
effects such as day on week, week on month, and month on year effects. The values were obtained from the Nifty50
index from April 2011 to March 2017 for calculation of effects on price and volume using dummy variables.
Kruskall- Wallis H statistical test was used to test the anomalies, and the findings would provide insights for making
informed decisions for investment.
Key Words: [Stock market efficiency, Calendar Anomalies, Dummy variables]
_Introduction
Market regulators observe information asymmetry as a cause to the insider trading activity, but a
common behavior of the equity markets such as a calendar anomaly can provide strategies for
devising trades. Anomalies refer to a situation in which a security or group of securities performs
to the assumptions on any fundamental fact that effects on the market activities. Most discussed
phenomenon is the seasonality effects, often called as Calendar effects which refers to regular
and repetitive fluctuation in time series occurring periodically have been documented over
several years, on the stock market returns. During the development of Indian stock market,
researches have tried to find out whether the Indian stock market is efficient or not. If the market
is not efficient there exists of some market anomalies, where the investors can gain some
abnormal returns by using well planned strategies in the market.
Equities tend to produce abnormal returns over a period of time and even in efficient markets
there exists various market anomalies due to new information, economic reports, company
announcements, political statements or any other factors those effects the market.. This security
prices should reflect fully at all the information that is available in the market Fama (1970) and
prior literature evidences the foundation of our study to identify the existence of such anomalies
in Indian stock market. Investments are decided based of a large number of factors. The
predictability of returns is a herculean task among the investors. The study aims at analyzing
calendar anomalies such as day of the week effect and month of the year effect. The variations so
captured will benefit the investing community by way of informed decisions and implement
better trading strategy. The paper is sequenced by the review of literature in the second section,
research gap for the current study, followed by research design in section three briefing the
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objectives of the study. The section four covers the data analysis and inferences of the analysis
and, finally, the fifth section with discussion and conclusion.
II. Review of Literature
Movements of stocks are irregular over a period of time, say on certain days, week or certain
month. The variations have been studied across various developed and developing markets and a
lot of these variations have become notable such as the Monday effect, January effect etc. The
studies have been of interest to market participants which act as a guide for investments and as
well for policy makers to device measures to ensure smooth functioning of markets. Calendar
anomalies such as day of week, week of month and month of year effect remained a interesting
topic for research since long time.
The January effect or tax-loss effect was the most popular anomaly mainly observed in the
western countries Patel Jayen (2002). It is not an international phenomenon and it reflected a
higher average return for the month of January compared to other months and prior studies noted
the phenomenon along with the study of market efficiency. Guo siqi (2007),Ciccone. B (2007),
ullah Irfan (2016) had highlighted the phenomenon of the January effect across various stock
market returns. Seasonal effect of higher returns in 1st half of the month was noted by
Nageswari.P (2011) and Posadas (2006) and semi month effects were also observed by the prior
studies Narayan Ash,sah (2009), M. Wong (2007) and Sudarvel.J (2016) and normal volume
due to seasonal variations was noted with the effects on weekend return. Sharma D.S (2011)
noticed the insignificant day of the week effect with inconsistency in stock prices as he observed
a negative Monday and positive Friday returns. The analysis provided insights for investors and
fund managers. Raiyani. R (2011), Verma P (2016) and Schwert G.W (2003), the different levels
of financial anomalies differ from the random walk theory and pave way to devise risk return
strategy and aid in predications of stock price. Archana.S (2014), T. Mallikarjunappa (2008) and
Dash mihir (2011), observed significant anomalies and tested the various forms of market
efficiency. The efficiency of the stock index needs to be known to device profitable trading
strategies as it would impact investment planning Khanna vandana (2016) Deev (2012).
Macroeconomic factors and firm specific factors were also used to check the market efficiency
and were noted by Maria. G (2016) and Yeung W.H (2015) studied the access to overall
information related to the foreign markets as a measure to reduce unsystematic risk, Sehgal.S
(2014) Malkiel B.G (2003) and Bhattacharya.S (2012) stressed that the information access
improve the more earnings to investors. Changes in policies, inside trading and the different tax
structures deviate the random walk and the deviations have paved the way to the need of the
study. Amarnani. N (2014), M. Naseer (2015),Latif. M (2011), had observed significant change
in returns due to these policy changes. T. Bohl, M(2010) stressed that the underlying assumption
of efficient market hypothesis is that the security prices reflect fully all the information that is
available in the market, and any shock is treated as an external error term. Is the phenomenon
common to in Indian stocks with respect to returns and also with volumes of trade? The current
study was an attempt to capture the anomalies in price along with the volume of trades in Indian
stock index Nifty 50.
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III. Research Design
Nature of the Study
The study is analytical, quantitative, and historical. Analytical as it confines to analysis of an
existing information, quantitative as it attempts to model the returns under study and historical as
it uses past data for analysis and interpretation. The research is built upon the secondary data for
a period of six years from financial year 2011 to 2017.
Objectives of the Study
1. To calculate the returns of the Indian stock index, on Nifty
2. To apply time dummies appropriate to the cyclicality.
3. To analyze the calendar anomalies namely day of the week effect and week of month
effect and month of the year effect.
Research Hypothesis
H01: The distribution of returns and volume is same across all days of the Week.
H02: The distribution of returns and volume is same across all Weeks of the Month.
H03: The distribution of returns and volume is same across all Months of the Year.
Research Methodology
Collection of data
National Stock exchange accounts more percentage of the total trading volume across the market
segments; therefore, we used the Nifty Index to study the volatility behavior of the market. This
study uses the daily closing prices of the Nifty Index, from the period 1St April 2011, through
31st March 2017. For the trading commenced from this day Nifty Index price data were collected
from the NSE website www.nseindian.com. The closing price data were converted to daily
compounded returns by taking the first log difference Returns of present day (R1) subtracted by
the previous day closing returns (R0) and the time factor (T) is divided by closing price and total
multiplied by (100).
Where; (R1-R0)/R0*100
R1= present day closing price
R0= previous day closing price
Tools used for analysis
Descriptive Statistics: Mean, Standard Deviation, Skewness & Kurtosis: This test is used to
calculate the mean of the total values. And the standard deviation and with the values Skewness
is to identify data which are not normally distrusted which are lying extremely left or right, and
the data of Kurtosis is used to find the higher or lower hump in the data
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Kruskall- Wallis test: The Kruskall-Wallis H test is "one-way ANOVA on ranks", it is a rank-
based non-parametric test that can be used to determine the differences between two or more
groups of an independent variable on a ordinal or continuous dependent variable.
Dummy variables: Dummy variables are used to code the variables of nominal or ordinal scales
for building models in multiple regressions. The returns are calculated values and the dummy
variables are coded according to the effect that is to be measured.
IV. Data Analysis and Interpretation
The data was obtained from the National Stock Exchange and the Bombay stock exchange
respectively, the calculation of returns and changes in volume was done in order to facilitate the
study the three anomalies namely, Day of the week, Week of the Month and the Month of the
year. Appropriate dummy variables were introduced to index the days, weeks and months.
Table 4.1: Descriptive statistics-Day of the week on Returns and Volume
Nifty50
Index Analysis of Returns-Day of Week Analysis of Volume-Day of Week
Day N Mean Std.
Deviation Kurtosis Skewness Mean
Std.
Deviation Kurtosis Skewness
MON 275 -0.01 1.06 3.45 -0.56 7.05 149.29 60.49 7.62
TUE 275 0.01 1.07 1.46 -0.15 15.71 74.89 108.47 9.66
WED 275 0.06 0.87 1.08 0.39 5.4 26.36 6.67 1.1
THU 275 0.03 1.04 1.2 -0.19 13.77 51.96 122.03 9.25
FRI 275 0.06 1.08 0.74 0.11 6.85 65.12 89.05 8.5
Total 1375 0.03 1.03 1.72 -0.13 9.75 84.28 142.46 10.92
H
value 0.136 163.038
Nifty Returns for Day of Week analysis signifies that the mean return on Monday (-0.0114) is
lower that all other days with a standard deviation of 1.06266. However highest standard
deviation of 0.87229 is observed in Wednesday with the mean return of 0.0632. The negative
skewness for Monday, Tuesday, and Thursday indicates the returns are negatively skewed,
whereas Wednesday and Friday slightly positively skewed.
The analysis of Volume for Day of Week suggests that the mean volume of Monday 7.0508
with the highest standard deviation of 149.288 than compared to all other days. However the
highest mean volume of Tuesday 15.7063 and standard deviation of 74.8912 and having the
positively skewed value of 9.661. But the least mean volume of Wednesday 5.3963 and least
standard deviation of 26.3618 and having the least positively skewed value of 1.103.
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Table 4.2: Hypothesis Test -Day of the week on Returns and Volume
Hypothesis Test: Independent Sample Kruskal-Wallis Test
Null Hypothesis Significance Decision
The distribution of return is the same 0.998
Accept Null
across categories of day Hypothesis
The distribution of volume is the same 0.000
Reject Null
across categories of day Hypothesis
Kruskall- Wallis H statistics is employed to test whether the differences in mean return across
the weekdays are statistically significant or not, and the returns was same across categories of
days. The calculated value of H for Nifty index for period is 0.136 which is lesser than the table
value of 9.488 at 5% level of significance. Hence we cannot reject the null hypothesis and
conclude that there is no significant different in the mean returns of weekdays. Similarly
hypothesis for the mean differences in volume was calculated, the H for Nifty index for period is
163.038 which is higher than the table value of 9.488 at 5% level of significance. Hence we
Reject the null hypothesis and concluded that there is significant different in the mean volume of
weekdays.
Graph 4.1: Box plot showing the distribution of data for Returns and Volume of Nifty 50
Days of the week effect
The median returns are equally distrusted in all the days, were as the upper quartile and the lower
quartile of each day was varied as observed from upper extreme and the lower extreme
(whiskers) but are laying similarly in same range over the values, but the outliers which are seen
above the whiskers line shows that the data for the period is non even and high volumes of trade
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was observed in the beginning of the week, least outliers observed on Wednesday and positive
returns were observed on Fridays.
Table 4.3: Descriptive statistics-Week of the Month on Returns and Volume
Nifty50
Index Analysis of Returns-Week of Month Analysis of Volume-Week of Month
weeks N Mea
n
Std.
Deviation
Kurtosi
s
Skewnes
s
Mea
n
Std.
Deviatio
n
Kurtosi
s
Skewnes
s
week 1 60 -0.08 1.90 -0.50 0.22 40.30 84.78 31.86 4.99
week 2 60 0.39 2.09 0.41 -0.68 16.10 26.34 0.01 0.71
week 3 60 0.33 2.06 1.35 0.92 17.61 49.37 11.31 2.49
week 4 60 0.43 2.19 -0.10 0.21 21.47 45.77 7.17 1.72
Total
24
0 0.26 2.06 0.23 0.18 23.87 56.20 46.46 5.16
H-
value 3.772 6.536
Week of the month mean returns of 1st week (-0.0841) was lower than all other week with the
standard deviation of 1.8970. However, the highest standard deviation of 2.1898 is observed in
4th week with the mean return of 0.4270.The negatively skewed of 2nd week indicates that the
returns are negative and positive on 3rd week. The mean volume of Monday 40.2970 which is
higher than all other days with standard deviation of 84.7838 and skewness value of 4.986.But
the lowest mean volume of 16.1024 and standard deviation of 26.3388 was found on Tuesday
with the lowest skewness value of 0.707, but no negative value founded in the volume of weeks.
During all weeks mean volume is 23.875 with standard deviation of 56.2043 and positively
skewed at 5.161 for the period from 1st April 2011 to 31st march 2017.
Table 4.4: Hypothesis Test -Week of the Month on Returns and Volume
Hypothesis Test: Independent Sample Kruskall-Wallis Test
Null Hypothesis Significance Decision
The distribution of return is the same 0.287
Accept Null
across categories of weeks Hypothesis
The distribution of volume is the
same 0.088
Accept
Null
across categories of weeks Hypothesis
However the calculated H-value for the nifty index period of 01 April 2011 to 31 March 2017 is
3.772 which is lower than the table value of 7.814 at 5% level of significant . Hence, we cannot
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the null hypothesis, that there is no significant difference and returns the same across all
categories of weeks.The differences in the mean volume across the weeks is 6.536 which is as
well lower than the table value 7.8147 at 5% level of significance. Hence we conclude that mean
volume of the weeks and remains same.
Graph 4.2: Box plot showing the distribution of data for Returns and Volume of Nifty 50
Week of the Month effect
The median returns of all the weeks are been varying as depicted by the upper and lower
quartiles of each week. The upper extreme and the lower extreme (whiskers) are gradually
expanding to the end of the month and the outliers in the middle of the month shows the more
fluctuation of returns and the high volume of trade in the month beginning and remains normal
in second week.
Table 4.4: Descriptive statistics-Month of the year on Returns and Volume
Nifty50 Index Analysis of Returns-Month of Year Analysis of Volume- Month of Year
Months N Mean
Std.
Deviation Kurtosis Skewness Mean
Std.
Deviation Kurtosis Skewness
APR 6 -0.05 2.65 1.01 0.02 34.95 28.51 0.87 0.74
MAY 6 1.15 5.07 -0.79 -0.12 106.73 95.42 -0.77 0.61
JUN 6 2.05 3.84 2.21 1.42 43.48 29.36 -1.29 -0.61
JUL 6 -0.06 2.48 -0.75 0.45 35.29 25.09 -1.75 0.3
AUG 6 -2.3 5.38 -1.69 -0.05 56.87 42.66 0.84 0.77
SEP 6 1.57 4.04 0.87 1.14 11.3 32.09 3.73 1.89
OCT 6 3.66 5.02 -2.15 0.23 12.88 60.44 1.27 -0.72
NOV 6 -1.49 4.64 -0.97 -0.12 74.96 62.11 -0.19 -0.82
DEC 6 -1.29 2.92 0.77 -1.28 -33.02 18.26 1.8 1.39
JAN 6 2.69 6.39 -0.78 0.25 233.91 120.91 -0.14 1.16
FEB 6 -0.16 5.02 -1.42 -0.78 47.84 49.74 -2.51 0.18
MAR 6 1.45 4.63 -0.68 -0.08 6.01 23.55 -0.35 -0.43
Total 72 0.6 4.48 -0.04 0.19 52.6 83.73 6.46 2.07
H-value 7.912 37.11
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The mean returns of October 3.6642 is higher than all other months with a standard deviation of
5.022. However the highest standard deviation is observed in January with a mean return of
2.6933. On the other hand, a lower mean return was observed in August that is (-2.3016). The
negatively skewness for May, August, November, December, February and March indicates the
returns are negative, where as June month was observed with positive skewed. Whereas the total
mean return is 0.6018 with a standard deviation of 4.4750 were both are positive whereas the
skewed value is also positive that of 0.189 for the period
The highest mean volume was 233.9142, in January month with a standard deviation of
120.9124, followed by 106.73 and standard deviation of 95.4219 in the month of May. The
highest skewed value is found in September month (1.8) and kurtosis value of 3.730. On the
other hand the lower mean return was found in March 6.0112 with a standard deviation of
23.553 and with the negatively skewed that is -0.431 where as the least standard deviation was
found in December 18.2638 with a positively skewed value of 1.386. But compared to returns
skewed value the volume are less skewed her June, October, November and March remaining are
positive. The all months mean volume is 52.599 with a standard deviation of 83.7251 with a
skewed value of 2.066 during the period 2011 to 2017.
Table 4.5: Hypothesis Test -Week of the Month on Returns and Volume
Hypothesis Test: Independent Sample Kruskall-Wallis Test
Null Hypothesis Significance Decision
The distribution of return is the same 0.721
Accept Null
across categories of Months Hypothesis
The distribution of volume is the same 0.000
Reject Null
across categories of weeks Hypothesis
Kruskall-Wallis H statistics was employed to test whether the differences in the mean return
across the month are statistically significant or not. The calculated value of H for Nifty index for
the period is 7.912 which is lower than the table value 19.675 at 5% level of significance. Hence
the Retain the null hypothesis and concluded that there is no significant difference in the mean
returns of the month and remains same. The calculated value of H for Nifty index volume for the
period was 37.11 which is higher than the table value 19.675 at 5% level of significance. Hence
the Reject the null hypothesis and concluded that there is a significant difference in the mean
volume of the month and remains different.
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Graph 4.3: Box plot showing the distribution of data for Returns and Volume of Nifty 50
Month of the year effect
The median returns of all the month are scattered along with the large and medium quartile range
of the Nifty index and volume of trade was the highest trade in January month and very low in
December month during the study period.
V. Discussion and Conclusion
The mean returns of the Nifty 50 index was observed negative on Monday with highest deviation
on volumes. The hypothesis examining the difference among returns was noted similar on all
days but the volumes differed. The week of the month also was noted with negative mean return
in the first week with large variation in volumes. The returns and the volume difference were
insignificant during the study period. The month of the year effect proved the January effect to
be significant in case of volumes and the returns were also higher in case of box plot whisker.
The findings of similar studies Jayen Patel(2016) noted no January effect in the international
markets and by the findings we can conclude that the Indian markets are a weak form efficiency
compares to its other developed counterparts. The analysis contrasted a few studies in case of the
beginning of the week and 1st half period Sundervel (2016). Though the Hypothesis had not
reflected the differences, a longer horizon analysis along with Sensex data can bring a better
understanding of the phenomenon.
References
Amarnani, N. (2014). Study of Calendar Anomalies in Indian Stock Markets.
Perspectives on Financial Markets and Systems-Market Efficiency, Behavioural Finance
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Archana, S. (2014). A Study on Market Anomalies in Indian Stock Market. International
Journal of Business and Administration Research Review, I(2347), 128–137.
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Month-by-Month Examination of Long-Term Stock Returns. Northest Business and
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stock exchange. Umea School of Business, Umea University, 1–60.
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An Empirical Study to Compare Non-Performing Assets in Private Sector
Banks in India
Munish Gupta
Department of Commerce St. Soldier College (Co-ed), Jalandhar
Abstract
The private sector banks in India characterize part of the Indian financial system that is comprised of both public
and private sector banks. The private sector banks are the banks in which the larger parts of stake or value are held
by private investors and not by the government. The banking in India has been conquered by public sector banks
since the 1969 when every giant bank was nationalized by the government. Be that as it may, since liberalization in
banking policies in 1990, new and old private sector banks have come into existence again. They have developed rapidly since liberalization over the two decades utilizing the innovation, making availed monetary tools and
procedures and contemporary developments. The development of the economy relies on the proficiency and stability
of the banking sector. The most critical factor which measures the wellbeing of the banking industry is the
magnitude of NPAs. Non-Performing assets have put impact on the financial position of banks. This paper has made
empirical study comparing level of NPAs between private sector banks under study.
Keywords: [Non Performing Assets, Private Sector Banks, India]
Objective of the Study
To make a comparative study of Non-performing assets in Private sector banks in India.
Sources of Data
The data collected is mainly secondary in nature. The sources of data for this paper include the
literature published by Indian Bank and the Reserve Bank of India, various magazines, Journals,
Books dealing with the current banking scenario and research papers.
Research Methodology
Research design used to conduct this study is observational research since it manages statistical
information and the fundamental point of the analysis is to compare Non-Performing Assets
level in Private Sector Banks. With the end goal of this study, data identified with average of
Gross NPA Ratio and Net NPA ratio has been taken for 6 private sector banks. The studyis done
based on data for the time of 8 years from the private sector banks from year 2010-11 to 2017-
18. Information is given the assistance of bar charts, tables and so on.
List of Banks Taken for Study
Sr.No. Name of the Bank Type of Bank Abbreviations
1. ICICI BANK Private Sector Bank ICICI
2. HDFC BANK Private Sector Bank HDFC
3. AXIS BANK Private Sector Bank AXIS
4. JAMMU & KASHMIR BANK Private Sector Bank J&K
5. KARNATAKA BANK Private Sector Bank KB
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6. DHANLAKSHMI BANK Private Sector Bank DB
Tools of Analysis
In order to achieve the above-mentioned objective, the data collected are entered, arranged and
presented using Microsoft Excel and SPSS 23. All information collected for the purpose of the
study has been arranged in cross sectional tables, depending upon the requirements of the
analysis. The tabulation encompasses absolute figures supported by simple percentage and
subjected to statistical analysis using Average, Standard Deviation, F-test using One-way
ANOVA technique.
Hypothesis of the Study
H0: There is no significant difference between level of Non-Performing assets in between
ICICI Bank, HDFC Bank, AXIS Bank, Jammu & Kashmir Bank, Karnataka Bank, Dhanlakshmi
Bank.
Analysis and Interpretation
Table 1: Average NPA level of Private Sector Banks
Year
Average NPA Ratio
ICICI HDFC AXIS J & K KB DB
2010-11 3.46 0.63 0.79 1.08 2.80 0.47
2011-12 2.78 0.57 0.73 0.85 2.69 0.79
2012-13 2.00 0.53 0.78 0.87 2.01 3.35
2013-14 2.00 0.59 0.87 0.64 2.42 4.03
2014-15 2.70 0.57 0.91 4.37 2.47 4.37
2015-16 4.40 0.60 1.23 6.32 2.90 3.96
2016-17 7.00 0.67 3.50 8.00 3.50 5.00
2017-18 7.50 0.85 5.50 7.50 4.00 5.00
Mean 3.98 0.62 1.79 3.70 2.85 3.37
St. Dev 2.17 0.10 1.77 3.22 0.63 1.78
CAGR 11.71% 4.49% 32.06% 31.98% 5.25% 40.18%
Source: RBI: Report On Trend and Progress of Banking in India
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Figure 1:
It can be seen in the Table- 1 that HDFC Bank is numerically associated with smallest mean
level of Average NPA Ratio i.e. Mean = 0.62% and ICICI Bank is associated with highest mean
level of Average NPA Ratio i.e. Mean = 3.98%. Further, Compound Annual Growth Rate
(CAGR) of Average NPA Ratio is highest in Dhanlakshmi Bank i.e. CAGR=40.18% and lowest
in HDFC Bank i.e. CAGR=4.49%. It is clear from the Bar Graph that there is a continuous
increase in Average Non-Performing Assets Ratio for ICICI Bank, Axis Bank, Jammu &
Kashmir Bank, Karnataka Bank and Dhanlakshmi Bank. However, HDFC Bank has shown
better control over mounting NPAs on year by year basis from 2010-11 to 2017-18.
Table 2: Test of significance (One Way ANOVA)
GNPA ratio
Sum of
Squares Df Mean Square
F Value
(P. Value=2.43) Sig.
Between
Groups 65.977 5 13.195 3.639 .008
Within
Groups 152.290 42 3.626
Total 218.267 47
*The mean difference is significant at the 0.05 level
In order to test the Hypotheses i.e. to compare the level of Average Non-Performing Asset Ratio
in private sector banks under study, one-way ANOVA has been performed. There is statistically
a significant difference between the groups as determined by one-way ANOVA Table 2 i.e.
FSTAT(5,42)=3.639> FCRITIC(5,42)=2.43 , α=0.05>0.008. Thus, null hypothesis of no significant
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difference between level of Average NPA Ratio of Private Sector Banks under study is rejected.
To evaluate the nature of difference between three means further, the statistically significant
ANOVA was followed up with Tuckey Post hoc test in Table – 3. This table highlights that
difference between level of average NPA level of ICICI Bank and HDFC Bank is significantly
different i.e .α=0.05 > p = 0.013. Similarly, there is significant difference between HDFC Bank
and Jammu & Kashmir Bank i.e. α =0.05 > p =0.027. These differences depict that HDFC Bank,
Axis Bank, Karnataka Bank and Dhanlakshmi bank has shown better control over NPAs rather
than ICICI Bank and Jammu & Kashmir Bank.
Table 3: Tukey HSD POST HOC test
(I) Private SectorBanks
Mean Difference (I-
J) Std. Error Sig.
ICICI HDFC 3.3538* .9521 .013*
AXIS 2.1913 .9521 .216
J&K .2763 .9521 1.00
KB 1.1313 .9521 .840
DB .6088 .9521 .987
HDFC ICICI -3.3538* .9521 .013*
AXIS -1.1625 .9521 .824
J&K -3.0775* .9521 .027*
KB -2.2225 .9521 .203
DB -2.7450 .9521 .064
AXIS ICICI -2.1913 .9521 .216
HDFC 1.1625 .9521 .824
J&K -1.9150 .9521 .353
KB -1.0600 .9521 .873
DB -1.5825 .9521 .564
J&K ICICI -.2763 .9521 1.00
HDFC 3.0775* .9521 .027*
AXIS 1.9150 .9521 .353
KB .8550 .9521 .945
DB .3325 .9521 .999
KB ICICI -1.1313 .9521 .840
HDFC 2.2225 .9521 .203
AXIS 1.0600 .9521 .873
J&K -.8550 .9521 .945
DB -.5225 .9521 .994
DB ICICI -.6088 .9521 .987
HDFC 2.7450 .9521 .064
AXIS 1.5825 .9521 .564
J&K -.3325 .9521 .999
KB .5225 .9521 .994
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*The mean difference is significant at the 0.05 level.
Conclusion
The NPAs have dependably made a major issue for the banks in India. Profitability of banks is
antagonistically affected because of development in non-performing assets.though 90% of NPAs
of scheduled commercial banks is occupied by Public sector banks.However in current
scenario,NPAs in Private sector banks are ballooning rapidly.The study shows that HDFC Bank,
Axis Bank, Karnataka Bank and Dhanlakshmi bank have managed their asset quality in a better
manner than ICICI Bank and Jammu & Kashmir Bank.Thus there is a dire need to persue the
stringent recovery mechanism in order to curb the inflating non-performing assets in
comparatively less efficient private sector banks.
References
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RBI: Report on Trend and Publications, New Delhi of Banking in India (Annual Issues)
(Various Issues)
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NPAs– Suggested strategies” - IBA Bulletin, August 2001.
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of Indian Commercial Banks, Working Paper 252, The Institute for Social and Economic
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Study of Canara Bank and State Bank of India, International Journal of Research in
Commerce and Management, Vol. 3, Issue 11, November, pp 42-49
Saikat Ghosh Roy “Determinants of Non-Performing Assets in India - Panel Regression
Eurasian Journal of Economics and Finance 2014
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Mukund P Unny (2011)“A Study on the Effectiveness of Remedies Available For Banks
in a Debt Recovery Tribunal - A Case Study on Ernakulam DRT”: Centre for Public
Policy Research.
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An Analysis of Customers’ Preference towards Traditional Banking and E-
Banking in Mansa District of Punjab
Rajni Bala Assistant Professor, Department of Commerce, Nehru Memorial Government College, Mansa
Abstract
The present paper is an attempt to study the bank customers’ preference towards traditional banking and E-
Banking. It also determines those factors influencing them for shifting or not shifting from traditional banking to E-
banking and suggests the suitable measures for enhancing E-banking services. Data has been collected through
well-structured questionnaire from 96 respondents of Mansa district. Percentage method, total weighted score
method are used to analyze the data. The study concludes that traditional banking is more preferred than E-banking
by most of the customers of Mansa district. More trust in traditional banking, lack of Knowledge, lack of privacy
and security are the major factors due to which customers do not want to shift from traditional banking to E-banking.
Keywords: [Traditional banking, E-banking, Customers’ Preference]
Introduction
In Indian economy before liberalization, globalization and privatization (LPG) era, all the
financial transactions in Indian banking sector were performed manually with a very little use of
computer system. With the introduction of IT Act 2000, information technology had brought an
electronic revolution in the Indian banking sector known as E-Banking. The banks are now
providing customer centric products like ATM, internet banking, telephone-banking, mobile-
banking, debit/credit card facilities and electronic transfer fund (EFT) for providing banking
services as per convenience of customers. E-banking has reduced the dependency of customers
on the traditional banking system. Now, customers do not have to visit their bank branch and
spend much time in queues of the bank premises for conducting their financial transactions. They
can perform their banking transactions through E-delivery channels at anywhere anytime.
Despite of so many facilities that E-banking offers, Indian bank customer still relies on
traditional methods of banking system and reluctant to use E-banking. Due to this reason,
customers do not want to shift from traditional banking to E-banking. The present study is
concerned with analysis of bank customers’ preference towards traditional banking and E-
Banking
Review of Literature
Chauhan and Choudhry (2015) noted that adoption of E-Banking by the customers was at the
early stage due to various challenges. The challenges such as security risk, privacy risk, trust
factor and less awareness among customer about E-banking were acting as hurdle in adoption of
E-Banking facility.
Oye et al(2011) found that customers felt hesitation in using new technology. They believed on
cash tradition and preferred wait in long queues of bank premises for their transaction rather than
on online banking.
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Khatri (2013) stated that internet banking was one of the channels of E-banking. It helped
customers to perform their financial transactions electronically over the internet. Customers’
education level, customers’ awareness about internet banking and internet infrastructure were
also major challenges for E-banking.
Sylvie and Xiaoyan (2005) explored the market status for adopting the online/mobile banking
in China by conducting the customer survey. The study concluded that mainly Chinese males not
necessarily young and highly educated were using online and mobile banking services. Lack of
computer and technology skill, perception of risk, Chinese traditional cash carrying banking
culture were found to be main barriers in the way of not adopting/using online banking. The
study also concluded that mobile banking in China was to be least used because of lack of
awareness and understanding of its benefit.
Objectives of the Study
To study and analyze the usage level of bank customers regarding traditional banking and
E-Banking.
To identify the E-banking channel most preferred by E-customers for using E-banking
services.
To determine the factors influencing the customers for shifting or not shifiting from
traditional banking to E-banking.
To suggest the suitable measures for enhancing E-Banking.
Research Methodology
The study is concerned with analysis of bank customers’ preference towards traditional banking
and E-Banking in Mansa district. Data has been collected through well- structured questionnaire
from 96 respondents of Mansa district. Data is presented in form of tables. Percentage method
and total weighted score method have been used to analyze the data. Total weighed score has
been calculated from five point Likert scale. Highest weight is given to first rank and lowest
weight is given to lowest rank.
Data Analysis and Interpretation
Table 1: Socio-Economic Profile of Customers
Group Number Percentage %
Gender
1. Male
2. Female
67
29
69.79
30.21
Age ( In Years)
Below 25
25-35
35-50
50 or above 50
13
29
41
13
13.54
30.21
42.71
13.54
Occupation
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1. Business man
2. Service man
3. Professional
41
35
20
42.71
36.46
20.83
Income
1. Below 1 lakh
2. 1lakh-3 lakh
3. 3 lakh-5 lakh
4. 5 or above 5 lakh
20
24
33
19
20.83
25.00
34.38
19.79
Total 96 100
(Authors’Calculation)
Table1 shows that out of 96 respondents, 69.79 per cent respondents are male and 30.21 per cent
are female. While studying the demographic profile, 42.41 per cent respondents belong to age
group 35 to50 years, 34.38 per cent respondents earning income from 3 lakh to 5 lakh rupees and
36.46 per cent customers belong to serviceman category show the maximum response in
comparison to others.
Table 2: Usage level of customers regarding traditional banking and E-Banking
Traditional Banking E-Banking
Group No. % No. %
Gender
1. Male
2. Female
42
22
43.75
22.92
25
7
26.04
7.29
Age ( In Years)
1.Below 25
2.25-35
3.35-50
4.50 or above 50
3
13
36
12
3.13
13.54
37.50
12.50
10
16
5
1
10.41
16.67
5.21
1.04
Occupation
1. Business man
2. Service man
3. Professional
37
15
12
38.54
15.63
12.50
4
20
8
4.17
20.83
8.33
Income
1. Below 1 lakh
2. 1lakh-3 lakh
3. 3 lakh-5 lakh
4. 5 or above 5 lakh
17
19
17
11
17.71
19.79
17.71
11.46
3
5
16
8
3.12
5.21
16.67
8.33
Total 64 66.67 32 33.33
(Authors’Calculation)
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Table 2 shows that overall 66.67 per cent respondents are using traditional banking services and
33.33 per cent respondents are using E-banking. Gender wise 43.75 per cent male are using
traditional banking and 26.04 per cent are using E-banking. Age group wise 37.50 per cent
respondents of age group 35 to 50 years are using more traditional banking and 16.67 per cent
respondents of age group 25 to 35 years are using more E-banking. Occupation wise traditional
banking is mostly used by business men i.e. 38.54 per cent and E-banking is mostly used by
service men i.e. 20.83 per cent. Income wise 19.79 per cent respondents earning income from 1to
3 Lakh rupees are using more traditional banking and 16.67 per cent customers earning income
from 3 to 5 lakh rupees are using more E-banking.
Table 3: Period (in years) of using Traditional Banking and E-Banking
Traditional Banking E-Banking
Group No. % No. %
Less than 1 year
1-3 years
3-5 years
More than 5 years
3
11
19
31
3.13
11.46
19.79
32.29
10
11
8
3
10.42
11.46
8.33
3.12
Total 64 66.67 32 33.33
(Authors’Calculation)
Table 3 shows that most of the customers i.e. 32.29 per cent are using traditional banking more
than 5 years. But E-banking is mostly used by customers i.e. 11.46 per cent between 1 to 3 years.
Least percentage of customers i.e. 3.12 per cent is using E-banking services more than 5 years.
Table 4: Preference of customers regarding E-Banking Services
E-banking Services R1 R2 R3 R4 R5 Total
Score
Overall
rank
ATM 10 9 8 3 2 118 2
Internet banking 13 8 7 2 2 124 1
Mobile banking 12 5 7 3 5 112 3
Telephone banking 0 2 2 7 21 49 5
Credit card 4 9 14 4 1 107 4
(Authors’Calculation)
Table 4 reveals that most of the respondents give the first rank to internet banking because it is
useful for them to transfer their fund. Second rank goes to ATM as customers can deposit and
withdraw the money anywhere anytime. Third rank goes to mobile banking and fourth rank goes
to credit card as it is convenient for shopping without carry any cash. Fifth rank goes to
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telephone banking as the customers consider it unpractical device for conducting banking
transactions.
Table 5: Response of customers regarding shifting from traditional banking to E-banking
Yes No
Group No. % No. % Total
Gender
1. Male
2. Female
25
10
26.04
10.42
17
12
17.71
12.50
42
22
Age ( In Years)
1.Below 25
2.25-35
3.35-50
4.50 or above 50
2
8
22
3
2.08
8.33
22.92
3.13
1
5
14
9
1.04
5.21
14.58
9.38
3
13
36
12
Occupation
1. Business man
2. Service man
3. Professional
18
9
8
18.75
9.38
8.33
19
6
4
19.79
6.25
4.17
37
15
12
Income
1. Below 1 lakh
2. 1lakh-3 lakh
3. 3 lakh-5 lakh
4. 5 or above 5 lakh
7
10
12
6
7.29
10.42
12.5
6.25
10
9
5
5
10.42
9.37
5.21
5.21
17
19
17
11
Total 35 36.46 29 30.21 64
(Authors’Calculation)
Table 5 shows that overall 36.46 per cent respondents want to shift from traditional banking to
E-banking and 29 per cent respondents are not willing to shift. Gender wise 26.04 per cent male,
Age group wise 22.92 per cent respondents of age group 35 to 50 years, Occupation wise 18.75
per cent customers belong to business class and Income wise 10.42 per cent respondents earning
from 3 to 5 Lakh rupees are more willing to shift from traditional banking to E-banking.
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Table 6: Factors influencing customers for shifting from traditional banking to E-banking
services (for those customers who want to shift)
Factors R1 R2 R3 R4 R5 Total
Score
Overall
rank
Easy to access/convenient 9 6 10 7 3 116 2
Up to date and accurate information 7 6 9 7 6 106 4
Quick transfer of fund 10 7 8 5 5 117 1
Use of anywhere anytime and no
need to wait in long queues of bank
8 7 8 6 6 110 3
More transparency 5 3 9 8 10 90 5
(Authors’Calculation)
Table 6 reveals that quick transfer of funds and easy to access/convenient are the strongest
factors influencing the customers for shifting from traditional banking to E-banking services. Up
to date and accurate information and transparency are the least motivational factors influencing
the customers for shifting from traditional banking to E-banking services.
Table 7: Factors influencing the customers for not shifting from traditional banking to E-
banking Services (for those customers who do not want to shift)
Factors R1 R2 R3 R4 R5 Total
Score
Overall
rank
Lack of awareness 9 6 5 6 3 99 4
Difficult and complicated 6 8 9 3 3 98 5
Lack of privacy and security 8 7 7 4 3 100 3
Lack of knowledge how to use it 10 8 5 4 2 107 2
More trust in traditional 13 7 4 3 2 113 1
(Authors’Calculation)
Table 7 shows that more trust in traditional banking, lack of Knowledge, lack of privacy and
security are the major factors influencing the customers for not shifting from traditional banking
to E-banking.
Table 8: Suggestions to enhance E-banking services
Suggestions R1 R2 R3 R4 R5 Total
Weighted
Score
Overall
rank
Customers training camp , seminar and
demo fair regarding E-Banking services
should be organized by bank
42 32 7 10 5 384 1
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Reading material regarding E-banking
services should be provided by bank
28 32 14 10 12 342 3
Help desk and inquiry counter should be
set up by bank
40 30 9 11 6 375 2
E-banking should be more secure to build
the trust of customers regarding it
31 23 17 15 10 338 4
Rules format and accessing E-banking
services should be simplified
20 15 30 16 15 297 5
(Author’s calculation)
Table 8 shows that most of the respondents suggested that customer training camps, seminars
and demo fairs regarding E- banking services should be organized by banks. Help desk and
inquiry counter should be established by banks to provide the solution of customers’ problems.
Reading material regarding E-banking services should be provided by banks to customers and
bank should make efforts for providing E-banking services more safe and secure.
Findings and Conclusion
Overall 66.67 per cent respondents are using traditional banking services and 33.33 per cent
respondents are using E-banking. Gender wise male, age wise respondents of age group 25 to 35
years, occupation wise service class, and income wise respondents earning income from 3 lakh to
5 lakh rupees are more using E-banking services in comparison to others. 36.46 per cent
respondents want to shift from traditional banking to E-banking. Quick transfer of funds and
easy to access/convenient are the strongest factors influencing the customers for shifting from
traditional banking to E-banking Services. 29 per cent respondents are not willing to shift from
traditional banking to E-banking services. More trust in traditional banking, lack of Knowledge,
lack of privacy and security are the major factors influencing the customers for not shifting from
traditional banking to E-banking. The study suggested that customer training camps, seminars
and demo fairs regarding E- banking services should be organized by banks. Help desk and
inquiry counter should be established by banks to provide the solution of customers’ problems.
Reading material regarding E-Banking services should be provided by banks to customers and
bank should make efforts for providing E-banking services more safe and secure to enhance E-
banking services in this area.
Limitation of the Study
Data has been collected from limited geographical area. The findings and conclusion of the
present study can be varied if further research is to be carried on in near future.
References
Chauhan, V & Choudhary, V. (2015). Internet Banking: Challenges and Opportunities
in Indian Context.Apeejay - Journal of Management Sciences and Technology, 2(3), pp.
29-40.
INTERNATIONAL JOURNAL OF BUSINESS MANAGEMENT & RESEARCH- A Bi-ANNUAL JOURNAL (ISSN 2249-2143)
IJBMR, 9(1), 2019 Page 66
Khatri, J. (2013). Internet Banking in Nepal :Use and Challenges. Banking Journal, 3(2),
pp.55-57.
Oye. N. D., Shakil, M. A & Lahad, N. A. (2011). E-Banking: A case study of Askari
Commercial bank Pakistan. International journal of Engineering Research and
Application, September-October, 1 (3), pp. 1152-1167.
Sylvie, L & Xiaoyan, L. (2005). Customers attitude towards online and Mobile banking
in China. International Journal of Bank Marketing, 23 (5), pp.362-380.
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A Comparative Study on Profitability Analysis of Selected Indian
Information Technology Industries
Tegjit Kaur
Research Scholar, Department of Economics, Desh Bhagat University, Mandi Gobindgarh
Abstract
IT has great possibility of becoming an engine of accelerated economic growth, efficiency, improvement for all
sectors of the economy, developing India’s position in export market, improving trade insufficiency and means of
efficient governance. This study is based on secondary data and discussions with personnel concerned. The
secondary data consists of the annual reports of three IT Industries ranging for the last 10 years. The data of the
sample IT industries (for a period of five years from 2008 to 2012) has been collected from the annual reports
published by the IT industries. The Financial tool that is used for the purpose of analysis are Earning Per
Share(EPS), Operating Profit Margin(OPM), Net Profit Margin(NPM), Debt Equity Ratio(DER), Return On
Assets(ROA), Return On Net worth(RNW), Current Ratio (CR), Fixed Assets Turnover Ratio(FTR) In this study we shall make analysis of each ratio by Descriptive Statistics (Mean, S.D., C.V.), Trend Analysis, One Way ANOVA and
Two Way ANOVA.
Keywords: [Profitability, IT Industries, India]
Introduction
Despite the global economy growing up, the Indian Information technology industry is
maintaining a steady pace of growth. Financial analysis is an aspect of the overall business
finance function that involves examining historical data for gain information about the current
and future financial health of a company. IT has great possibility of becoming an engine of
accelerated economic growth, efficiency, improvement for all sectors of the economy,
developing India’s position in export market, improving trade insufficiency and means of
efficient governance. In enhances way in to information, protects consumers, provides access to
government services, makes skill creation and training more effective, improves liberation of
health services, and promotes simplicity. The present paper attempts to measure the profitability
position of leading Indian IT companies for the period 2005-15. The paper is structured as
follows: it presents scope of study, a brief review of the literature dealing with the accounting
and liquidity performance, followed by a description of the objectives, data and methodology.
Subsequently, it discusses the results, and finally, offers the conclusion.
Review of Literature
Bortolotti et al. (2002) examined the financial and operating performance of thirty one national
telecommunication companies in twenty five countries that were fully or partially privatized
through public share offering. Using conventional pre-versus post-privatization comparisons and
panel data estimation techniques, they find that the financial and operating performance of
telecommunication companies improves significantly after privatization, but a sizable fraction of
the observed improvement results from regulatory changes-alone or in combination with major
ownership changes-rather than from privatization alone
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Rao et al. (2013) in their study entitled “An Empirical Analysis on Financial Performance of
Public Sector Housing Corporation in India: A Case Study of HUDCO”, stated that the main
concept of their study is Profitability and liquidity management is of crucial importance in
financial management decision. The most favourable financial performance could be achieved by
a company that can trade-off between profitability and liquidity performance indicators. The
purpose of this study is to find out the financial position of and know the significance of them.
Descriptive statistics discloses that performance of the selected unit in terms of liquidity,
solvency and profitability position is very satisfactory and relatively efficient financial position is
found in 36 all the cases. They suggested that both the institutions under the study should
concentrate on financial profitability, especially unexplained variables in purpose of creating
shareholders‟ wealth
Daga and Parikh (2014) analyzed the financial performance of three IT giants of India – Tata
Consultancy Services limited (TCS), Wipro Limited and Infosys Technologies Pvt. Ltd and
understanding their foreign market exposure risk. With depreciation of Indian currency
(depreciated to almost 60% since global economic crises 2008), understanding the exposure risk
of Indian IT sector becomes all the more important. The study is based upon secondary data
covering the period from 2003-2004 to 2012-2013. For analyzing the financial performance of
all the three companies, growth analysis and ratio analysis are calculated. To understand the
foreign market exposure risk Coefficient of Variation and Ratio analysis of turnover, gross profit
and net profit for companies for two different period, 2003-2008 and 2008-2013 are calculated
and compared.
Davda (2012) analyzes the profitability position of the sample banks ICICI, HDFC, AXIS,
KOTAK MAHINDRA, ING Vysya Bank and Indusind Bank for a period of ten years 2002 to
2011. The study helps an investor who would like to be rational and scientific in his investment
activity has to evaluate a lot of information about past performance and the expected future
performance of the companies, industries and the economy as a whole before taking the
investment decision The Financial tool that is used for the purpose of analysis are Earning Per
Share, Net Profit Margin, Return on Equity, Assets turnover Ratio, and Return on Assets. While
interpreting the results, the statistical tool of one way Analysis of Variance (ANOVA) has been
used.
Sornaganesh and Maheswari (2014) anaylsed the profitability position the sample companies.
The study adopts an analytical and descriptive research design. The data of the sample IT
industries (for a period of five years from 2008 to 2012) has been collected from the annual
reports published by the IT industries. The Financial tool that is used for the purpose of analysis
are Earning Per Share(EPS), Operating Profit Margin(OPM), Net Profit Margin(NPM), Debt
Equity Ratio(DER), Return On Assets(ROA), Return On Net worth(RNW), Current Ratio (CR),
Fixed Assets Turnover Ratio(FTR).The statistical tool that is used for testing hypothesis is Two-
Way Analysis Of Variance (ANOVA).
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Objectives
In the background of the above discussion the following broad objectives are outlined to Study
the Profitability Analysis of Information Technology Companies.
To analyze the financial efficiency of the Information Technology Industries.
To analyze the profitability position of the Information Technology Industries.
Research Hypothesis
The following Hypotheses have been taken to test
H01: The GPS of TCS, Infosys and Wipro does not differ significantly.
H02: The NPS of TCS, Infosys and Wipro does not differ significantly.
H03: The ROCE of TCS, Infosys and Wipro does not differ significantly.
H03: The RONW of TCS, Infosys and Wipro does not differ significantly.
Scope of the Study
The study aimed to make an analysis of financial performance of Information
Technology industries in India. Hence, the present study is pertaining to Indian top
three Information Technology companies. The study has used the financial facts of
the selected companies from 2005-06 to 2014-15. The financial performance of the
sample companies is evaluated in terms of Profitability.
Sample Design
Sampling Technique: The study is done with special reference to IT industries in India. The
reason being that the data or the financial statements are readily available . Apart from this, IT
industries in India are bound to disclose all their facts and figures publicly. Thus, the technique
of 'Convenience Sampling' is being adopted for the study.
Sample Size: A sample of three IT Industries in India viz., TCS, INFOSYS and WIPRO is
consider for the purpose of analysis.
Data and Variables
This study is based on secondary data and discussions with personnel concerned. The secondary
data consists of the annual reports of three IT Industries ranging for the last 10 years.
Time Period of the Study
The study is conducted based on the audited financial statements of three selected companies of
IT Industries for a period of 10years (2005-06 to 2014-15) The duration of the period is good
enough to cover the short term fluctuations and is sufficient to provide insights into the
performance of the different selected companies.
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Methodology
The present study adopts an analytical and descriptive research design. The data of the sample IT
industries (for a period of 10 years from 2005-06 to 2014-15) has been collected from the annual
reports published by the IT industries. A finite sample size of three industries has been selected
for the purpose of the study which are TCS, WIPRO and INFOSYS. .The following tools &
techniques has been classified in the study
1. Profitability Ratio Analysis
A Ratio is figure showing the logical relationship between any two items taken
financial Statement. A number of ratios are used by profitability analysis. They can be
classified as
Operating Profit Ratio,
Net Profit Ratio
ROCE
RONW
2. Descriptive Statistical Analysis
Mean
S.D.
C.V.
3. Straight line Trend Analysis
The trend equation is formed as
Y =
Where:
is the constant term and
is the slope of the trend line
4. Advanced technique such as One Way ANOVA and Two Way ANOVA are also applied
Results
Operating Profit Ratio
Operating Profit Ratio measures the relationship between operating profit and revenue from
operation. An increase in the ratio over the previous period shows improvement in operational
efficiency of the business enterprise. The results of various analyses on Operating Profit Ratio of
selected IT Companies are as under:
Descriptive Statistics
Descriptive statistics of IT industries wise and year wise Operating Profit Ratio are shown in the
following table no 4.1
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Table 1: Descriptive statistics of Operating Profit Ratio between IT industries
Year TCS INF WIP Mean SD CV
2005-06 28.26 32.47 24 28.2 4.2 15.0
2006-07 27.7 31.8 22.9 27.5 4.5 16.2
2007-08 25.5 31.6 20 25.7 5.8 22.6
2008-09 26.2 33.5 20.5 26.7 6.5 24.4
2009-10 29.7 34.6 22 28.8 6.4 22.1
2010-11 29.8 32.6 20.7 27.7 6.2 22.5
2011-12 29.6 32 18.8 26.8 7.0 26.2
2012-13 29 28.9 20.45 26.1 4.9 18.8
2013-14 30.9 27.4 22.18 26.8 4.4 16.4
2014-15 26.1 28.7 21.9 25.6 3.4 13.4
Mean 28.3 31.4 21.3
SD 1.8 2.3 1.5
CV 6.5 7.3 7.2
Table 1 shows the average Operating Profit Ratio of different years is the highest in case of
Infosys (31.4), followed by TCS with average Operating Profit Ratio of different years (28.3)
and Wipro with the average Operating Profit Ratio Of different years (21.3) .Coefficient of
Variation of different years is highest in case of Infosys (7.3) showing more variability and less
consistency in Operating Profit Ratio. Coefficient of Variation of different years is slightly less
in case of Wipro (7.2) and lowest in case of TCS (6.5) showing more consistency and
homogeneity and less variability in Operating Profit Ratio.
Year-wise analysis shows that the average Operating Profit Ratio is highest in the year 2009-10
that is 28.8 for selected three IT industries (TCS, Infosys and Wipro). Coefficient of Variation is
highest in case of year 2011-12 (26.2 percent) indicating more variability in Operating Profit
Ratio across the selected IT industries.
It is concluded that Infosys has the highest average Operating Profit Ratio as compare to all other
selected IT Companies during the study period. TCS Company has higher degree of uniformity
in Operating Ratio during study period. So, Infosys has more managerial efficiency as compare
to other selected industries. It is also concluded that in the year 2014-15 of selected companies
there is higher degree of uniformity in Operating Profit Ratio as compared to other years.
Straight line Trend Analysis
The trend equation is formed as
Y =
Where:
is the constant term and
is the slope of the trend line
In trend analysis, we estimated Model Summary and trend equations of Operating Profit Ratio of
selected companies.
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Table 2: Model Summary for Operating Profit Ratio of selected Companies
R R2 F value p value Constant
value
Beta
coefficient t value p value
TCS 0.30 0.09 0.83 0.39 27.3 0.19 0.91 0.39
INF 0.68 0.46 6.81 0.03* 34.2 -0.51 -2.61 0.03*
WIP 0.34 0.11 1.02 0.34 22.3 -0.17 -1.01 0.34
*Significant at 0.05 level
The above table no.2 show that time doesn’t have a significant effect on Operating Profit Ratio
of TCS and Wipro because the coefficient of time is insignificant and R2 is very low, therefore,
the models of TCS and Wipro are not a good fit. But in the case of Infosys, time has a significant
effect on Operating Profit Ratio because the coefficient of time is significant and R2 is not very
low.
The estimated trend equations are;
TCS: y = 0.19X + 27.3
INF: y = -0.51X + 34.2
WIP: y = -0.17X + 22.3
It is concluded that time does not affect much on the Operating Profit of TCS and Wipro
Companies.
One Way Analysis of Variance
For the testing of the following hypothesis, One Way ANOVA has been applied on
Operating Profit Ratio of selected companies.
Hypothesis:
H0: There is no significant difference in Mean Operating Profit Ratio of selected IT Companies
between the years.
H1: There is significant difference in Mean Operating Profit Ratio of selected IT Companies
between the years.
Table 3: One Way ANOVA
Source of
Variation SS df MS F P-value F crit
Between
Years 30.12001 9 3.346668 0.112485 0.998997 2.392814
Within Years 595.0415 20 29.75207
Total 625.1615 29
The above table shows that the calculated F-value is less than that of table value, so null
hypothesis is accepted .The result shows that there is no significant difference in Operating Profit
Ratio of selected years.
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It is concluded that Operating Profit Ratio of selected IT companies remained constant
during the study period.
Two Way ANOVA
To test the following Hypotheses, Two Way ANOVA has been used on Operating Profit Ratio
of selected companies
Hypothesis Testing:
Comparison between companies:
H0: Mean Operating Profit Ratio of selected years is not significantly different between selected
IT companies.
H1: Mean Operating Profit Ratio of selected years is significantly different between selected IT
companies.
Comparison between years:
H0: Mean Operating Profit Ratio of selected IT companies is not significantly different between
selected years.
H1 ; Mean Operating Profit Ratio of selected IT companies is significantly different between
selected years
Table 4: Two Way ANOVA for Operating Profit Ratio
Source of Variation SS Df MS F P-value F crit
Between the Companies 526.13 2 263.714 68.7 3.75e-09 3.55
Between the Years 30.129 9 3.34 0.87 0.57 2.45
Error 68.91 18 3.82
Total 625.16
The above table shows the result of Operating Profit Ratio between the companies and years
Between the Companies
The calculated F-value is more than the table value. So, the null hypothesis is rejected. The result
shows that there is significant difference in Operating Profit Ratio of selected companies. It
means that Operating Profit Ratio varies between the selected IT Companies.
Between the years
In the above table the calculated F-value is less than the table value. So, the null hypothesis is
accepted, the result shows that there is no significant difference in Operation Profit Ratio
between the years. This implies that the Operating Profit ratio has not fluctuated much in
different years.
It is concluded that Operating Profit Ratio varies between the companies but not between years.
Net Profit Ratio
Net Profit Ratio establishes the relationship between net profit and revenue from operation. This
ratio helps in determining the operational efficiency of the business .An increase in the ratio over
the previous period shows improvement in operational efficiency and decline means otherwise.
A comparison with the industry standard is also an indicator of the efficiency of a business. The
results of various analyses on Net Profit Ratio of selected IT Companies are as under:
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Descriptive Statistics
Descriptive statistics of IT industries wise and year wise Net Profit Ratio are shown in following
table 5
Table 5: Descriptive statistics of Net Profit Ratio between IT industries
Year TCS INF WIP Mean SD CV
2005-06 22.21 25.23 19.28 22.2 3.0 13.4
2006-07 22.41 27.1 19.31 22.9 3.9 17.1
2007-08 21.98 27.91 16.43 22.1 5.7 26.0
2008-09 18.89 27.6 15.17 20.6 6.4 31.0
2009-10 23.31 27.55 17.01 22.6 5.3 23.4
2010-11 24.29 24.85 17.05 22.1 4.4 19.7
2011-12 21.29 24.69 15.07 20.4 4.9 24.0
2012-13 22.09 23.36 16.43 20.6 3.7 17.9
2013-14 23.42 21.25 18.3 21.0 2.6 12.2
2014-15 20.97 23.2 18.44 20.9 2.4 11.4
Mean 22.1 25.3 17.2
SD 1.5 2.2 1.5
CV 6.8 8.9 8.9
Table 5 shows the average Net Profit Ratio of different years is highest in case of Infosys (25.3),
followed by TCS with average Net Profit Ratio of different years (22.1) and Wipro with average
Net Profit Ratio of different years (17.2). Coefficient of Variation of different year is highest in
case of Infosys and Wipro (8.9) showing more variability and less consistency in Net Profit
Ratio. Coefficient of Variation of different year is lowest in case of TCS (6.8) showing more
consistency and homogeneity and less variability in Net Profit Ratio.
Year-wise analysis shows that the average Net Profit Ratio is highest in year 2006-07 that is
22.9 for selected three IT industries (TCS, Infosys and Wipro). Coefficient of Variation is
highest in case of year 2008-09 (31 percent) indicating more variability in Net Profit Ratio for
selected IT industries.
It is concluded that Infosys has highest average Net Profit Ratio as compared to all other
selected IT Companies .TCS company has high degree of uniformity in Net Profit Ratio during
study period .So, Infosys has more overall efficiency as compare to other selected industries. It is
also concluded that in year 2014-15 of selected companies have higher degree of uniformity in
Net Profit Ratio as compared to other years.
Straight Line Trend Analysis
The trend equation form as
Y =
Where:
is constant term and
is the slope of trend line
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Table 6: Model Summary for Net Profit Ratio of selected Companies
R R2 F value p value Constant
value
Beta
coefficient t value p value
TCS 0.06 0.003 0.03 0.88 21.9 0.03 0.16 0.88
INF 0.76 0.58 11.1 0.00** 28.4 -0.57 -3.33 0.00**
WIP 0.18 0.03 0.26 0.62 17.7 -0.09 -0.51 0.62
**Significant at 0.01 level
The above table 6 shows that time doesn’t have a significant affect much on Return on Capital
Employed Ratio of TCS and Wipro because the coefficient of time is insignificant and R2 is very
low. Therefore, the models of TCS and Wipro are not a good fit. But in the case of Infosys, time
has effect much on Net Profit Ratio because the coefficient of time is significant and R2 is not
very low.
The estimated trend equations are ;
TCS :y = 0.03X + 21.9
INF : y = -0.57X + 28.4
WIP :y = -0.09X + 17.7
It is concluded that time not affect on Net profit of TCS and Wipro companies
One Way ANOVA
For the testing of hypothesis, One Way ANOVA has been applied on Net Profit Ratio of selected
companies.
Hypothesis Testing:
H0: There is no significant difference in Mean Net Profit Ratio of selected IT Companies
between the years.
H1: There is significant difference in Mean Net Profit Ratio of selected IT Companies between
years.
Table 7: One Way ANOVA
Source of
Variation SS Df MS F P-value F crit
Between years 24.58096 9 2.731218 0.140324 0.997637 2.392814
Within years 389.2723 20 19.46362
Total 413.85326 29
In above table shows that the calculated F-value is less than table value. So, null hypothesis is
accepted .The result shows that there is no significant difference in Net Profit Ratio of selected
years.
It is concluded that Net Profit Ratio of selected IT companies remains constant during study
period
Two Way ANOVA
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For the testing hypotheses, Two Way ANOVA has been applied on Net Profit Ratio of selected
companies
Hypotheses Testing:
Comparison between companies:
H0:Mean Net Profit Ratio of selected years is not significantly different between selected IT
companies.
H1:Mean Net Profit Ratio of selected years is significantly different between selected IT
companies.
Comparison between years:
H0: Mean Net Profit Ratio of selected IT companies is not significantly different between
selected years.
H1 ; Mean Net Profit Ratio of selected IT companies is significantly different between selected
years
Table 8: Two Way ANOVA for Net Profit Ratio
Source of Variation SS Df MS F P-value F crit
Between the Companies 326.5351 2 163.2676 46.84327 7.34E-08 3.554557
Between the Years 24.58096 9 2.731218 0.783617 0.634369 2.456281
Error 62.73721 18 3.4854
Total 413.8533 29
The above table shows that result of Net Profit Ratio between the companies and years
Between the companies
The calculated F-value is more than the table value. So, the null hypothesis is rejected. The result
shows that there is significant difference in Net Profit Ratio of selected companies. It means that
Net Profit Ratio varies between the selected IT Companies.
Between the years
In above table the calculated F-value is less than table value. So, null hypothesis is accepted. The
result shows that there is no significant difference in Net Profit Ratio of selected years. This
implies that Net Profit Ratio is not fluctuated in different years.
It is concluded that Net Profit Ratio is varies between the companies but not between years.
Return on Capital Employed Ratio
Return on Capital Employed ratio establishes the relationship between Net Profit before Interest
Tax and Dividend to Capital employed. It aims to determine the overall performance of the
enterprise. The results of various analyses on Return on Capital Employed Ratio of selected IT
Companies are as under:
Descriptive Statistics
Descriptive statistics of IT industries wise and year wise Return on Capital Employed Ratio are
shown in following table 9
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Table 9: Descriptive Statistics of R.O.C.E between IT industries
Year TCS INF WIP Mean SD CV
2005-06 49.45 35.28 34.2 44.22667 12.64 22.5
2006-07 55.9 42.3 35.9 42.83333 10.0 23.86
2007-08 47.1 37.2 30.5 33.53333 8.5 25.35
2008-09 37.5 37.4 30.5 31.4 8.5 27.07
2009-10 41 30.3 28.8 29.8 9.6 32.21
2010-11 42.2 27.9 25.8 29.7 10.5 35.35
2011-12 38.3 29.1 22.5 28.43333 10.1 35.5
2012-13 40.6 27.2 23.15 31.50667 8.2 26.03
2013-14 43.4 25.8 24.73 32.64667 9.7 29.7
2014-15 38.5 26 23.34 29.87667 7.2 24.1
Mean 43.07 31.87 25.24
SD 7.24 6.14 5.42
CV 16.80 19.2 21.4
Table 9 shows the average Return on Capital Employed of different years is the highest in case
of TCS ( 43.07), followed by Infosys with average Return on Capital Employed Ratio of
different years (31.87) and Wipro (25.24) with average Return on Capital Employed Ratio of
different years. Coefficient of Variation of different year is highest in case of Wipro (21.4)
showing more variability and less consistency in Return on Capital Employed Ratio. Coefficient
of Variation of different year is slightly less in case of Infosys (19.2) and lowest in case of TCS
(16.8) showing more consistency and homogeneity and less variability in Return on Capital
Employed Ratio.
Year-wise analysis shows that the average Return on Capital Employed Ratio is highest in year
2005-06 that is 44.22 for selected three IT industries (TCS, Infosys and Wipro). Coefficient of
Variation is highest in case of year 200-11 (35.3percent) indicating more variability in Return on
Capital Employed Ratio for selected IT industries.
It is concluded that TCS has the highest average and has higher degree of uniformity in ROCE
during study period. So, TCS has more overall performance as compare to other selected IT
Industries. It is also concluded that in year 2005-06 have highest average and in year 2005-06 of
selected companies have higher degree of uniformity in ROCE as compared to other years.
Straight Line Trend Analysis
The trend equation form as
Y =
Where:
is the constant and
is the slope of trend line
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In applying of trend analysis, we estimated Model Summary and trend line equation of
Ratio of selected companies.
Table 10: Model Summary for Return on Capital Employed Ratio of selected Companies
R R2 F value p value Constant
value
Beta
coefficient t value p value
TCS 0.61 0.37 4.73 0.06* 51.1 -1.46 -2.17 0.06
INF 0.93 0.86 48.9 0.00** 42.2 -1.88 -7.0 0.00**
WIP 0.37 0.14 1.23 0.30 28.8 -0.66 -1.11 0.30
**Significant at 0.01 level
The above table 10 shows that time doesn’t have a significant affect much on Return on Capital
Employed Ratio of TCS and Wipro because the coefficient of time is insignificant and R2 is
very low. Therefore, the models of Wipro and TCS are not a good fit. But in the case of Infosys,
time has effect much on Return on Capital Employed Ratio because the coefficient of time is
significant and R2 is not very low.
The estimated trend equations are
TCS : y =-1.46X + 51.1
INF : y = -1.88X + 42.4
WIP: y = -0.66X + 28.8
It is concluded that time does not affect much on return on capital employed of Wipro
Companies.
One Way Analysis of Variance
For the testing of hypothesis, One Way ANOVA has been applied on Return on Capital
Employed Ratio of selected companies.
Hypothesis Testing
H0: There is no significant difference in mean Return on Capital Employed Ratio of selected IT
Companies between the years.
H1: There is significant difference in mean Return on Capital Employed Ratio of selected IT
Companies between years.
Table 11: One Way ANOVA
Source of
Variation SS df MS F P-value F crit
Between Years 834.3179 9 92.70199 0.993183 0.475807 2.392814
Within Years 1866.766 20 93.33828
Total 2701.089 29
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In above table shows that the calculated F-value is less than table value. So, null hypothesis is
accepted .The result shows that there is no significant difference in Operation Profit Ratio of
selected years.
It is concluded that Return on Capital Employed Ratio of selected IT companies remained
constant during study period.
Two Way ANOVA
For the testing hypotheses, Two Way ANOVA has been applied on Return on Capital Employed
Ratio of selected companies
Hypothesis Testing
Comparison between companies
H0: Mean Return on Capital Employed Ratio of selected years is not significantly different
between selected IT companies.
H1: Mean Return on Capital Employed Ratio of selected years is significantly different between
selected IT companies.
Comparison between years:
H0: Mean Return on Capital Employed Ratio of selected IT companies is not significantly
different between selected years.
H1 ; Mean Return on Capital Employed Ratio of selected IT companies is significantly different
between selected years
Table 12: Two Way ANOVA for Return on Capital Employed Ratio
Source of Variation SS Df MS F P-value F crit
Between the Companies 1625.168 2 812.5841 60.54083 1.02E-08* 3.554557
Between the Years 834.3179 9 92.70199 6.906676 0.000268* 2.456281
Error 241.5975 18 13.42208
Total 2701.0834 29
*Significant at 0.01 level
The above table shows that result of Return on Capital Employed Ratio by between the
companies and years between the companies
The calculated F-value is more than the table value. So, the null hypothesis is rejected. The
results show that there is significant difference in Return on Capital Employed Ratio of selected
companies. It means that Return on Capital Employed Ratio varies between the selected IT
Companies.
Between the years
In above table the calculated F-value is more than table value. So, null hypothesis is rejected.
The result shows that there is significant difference in Return on Capital Employed Ratio of
selected years. So it means that Return on Capital Employed Ratio is fluctuated in different
years.
It is concluded that Return on Capital Employed Ratio is varies between companies as well as
between years.
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Return of Net Worth Ratio
Return of Net Worth is also known as Return on Equity. It indicates the amount of net income
returned as a percentage of share equity. Return on Equity measure Corporations profitability by
revealing how much profit a company generates with the money shareholder have investment.
The results of various analyses on Return of Net Worth Ratio of selected IT Companies are as
under:
Descriptive Statistics
Descriptive statistics of IT industries wise and year wise Return of Net Worth Ratio are shown
in following table 13
Table 13: Descriptive statistics of Return of Net Worth Ratio between IT industries
Year TCS INF WIP Mean SD CV
2005-06 49.45 35.28 34.2 39.6 8.5 21.5
2006-07 55.9 42.3 35.9 44.7 10.2 22.8
2007-08 47.1 37.2 30.5 38.3 8.4 21.8
2008-09 37.5 37.4 30.5 35.1 4.0 11.4
2009-10 41 30.3 28.8 33.4 6.7 19.9
2010-11 42.2 27.9 25.8 32.0 8.9 27.9
2011-12 38.3 29.1 22.5 30.0 7.9 26.5
2012-13 40.6 27.2 23.15 30.3 9.1 30.1
2013-14 43.4 25.8 24.73 31.3 10.5 33.5
2014-15 38.5 26 23.34 29.3 8.1 27.6
Mean 43.4 31.8 27.9
SD 5.8 5.8 4.8
CV 13.4 18.1 17.1
Table 13 shows the average Return of Net Worth Ratio of different years is highest in case of
TCS (43.4), followed by Infosys with average Return of Net Worth Ratio of different years
(31.8) and Wipro with average Return of Net Worth Ratio of different years (27.9). Coefficient
of Variation of different year is highest in case of Infosys (18.1) showing more variability and
less consistency in Return of Net Worth Ratio. Coefficient of Variation of different year is
slightly less in case of Wipro (17.2) and lowest in case of TCS (13.4) showing more consistency
and homogeneity and less variability in Return of Net Worth Ratio.
Year-wise analysis shows that the average Return of Net Worth Ratio is highest in year 2006-07
that is 44.7 for selected three IT industries (TCS, Infosys and Wipro). Coefficient of Variation is
highest in case of year 2013-14 (33.4 percent) indicating more variability in Return of Net Worth
Ratio for selected IT industries.
It is concluded that TCS has highest average and have higher degree of uniformity in RONW
during study period. So, TCS has more profit to generates with the money shareholder have
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investment. It is also concluded that in year 2008-09 of selected companies there is higher degree
of uniformity in Return on Net Worth as compare to other years.
Straight Line Trend Analysis
The trend equation form as
Y =
Where:
is the constant and
is the slope of trend line
In applying of trend analysis, we estimated Model Summary and trend equations of
Return on Net Worth of selected companies.
Table 14: Model Summary for Return of Net Worth Ratio of selected Companies
R R2 F value p value Constant
value
Beta
coefficient t value p value
TCS 0.68 0.46 6.73 0.03* 50.6 -1.3 -2.59 0.03*
INF 0.88 0.78 27.6 0.00** 41.1 -1.67 -5.26 0.00**
WIP 0.92 0.85 45.1 0.00** 35.9 -1.45 -6.71 0.00**
**Significant at 0.01 level *Significant at 0.05 level
The above table 14 shows that time has a significant affect much on Return on Capital
Employed Ratio of TCS, Infosys and Wipro because the coefficient of time is significant and R2
is very not low. Therefore, the models of TCS, Infosys and Wipro are a good fit. But in the case
of all selected companies, time has effect much on Return on Capital Employed Ratio because
the coefficient of time is significant and R2 is not very low
The estimated trend equations are
TCS :y = -1.3X + 50.6
INF : y = -1.67X + 41.1
WIP :y = -1.45X + 35.9
It is concluded that time affect much on Return on Net Worth of all selected companies.
One Way Analysis of Variance
For the testing of hypothesis, One Way ANOVA has been applied on Return of Net Worth Ratio
of selected companies.
Hypothesis Testing:
H0: There is no significant difference in Mean Return of Net Worth Ratio of selected IT
Companies between the years.
H1: There is significant difference in Mean Return of Net Worth Ratio of selected IT Companies
between years.
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Table 15: One Way ANOVA
Source of
Variation SS df MS F P-value F crit
Between years 684.4519 9 76.05021 1.073678 0.422308 2.392814
Within years 1416.629 20 70.83146
Total 2101.081 29
In above table shows that the calculated F-value is less than table value. So, null hypothesis is
accepted .The result shows that there is no significant difference in Return on Net Worth of
selected years.
It is concluded that Return of Net Worth Ratio of selected IT companies remained constant
during study period
Two Way ANOVA
For the testing hypotheses, Two Way ANOVA has been applied on Return of Net Worth Ratio
of selected companies
Hypotheses Testing:
Comparison between companies:
H0: Mean Return of Net Worth Ratio of selected years is not significantly different between
selected IT companies.
H1: Mean Return of Net Worth Ratio of selected years is significantly different between
selected IT companies.
Comparison between years:
H0: Mean Return of Net Worth Ratio of selected IT companies is not significantly different
between selected years.
H1 ; Mean Return of Net Worth Ratio of selected IT companies is significantly different between
selected years
Table 16: Two Way ANOVA for Return of Net Worth Ratio
Source of Variation SS Df MS F P-value F crit
Between the Companies 1291.284 2 645.6421 92.7165 3.32E-10* 3.554557
Between the Years 684.4519 9 76.05021 10.92108 1.22E-05* 2.456281
Error 125.3451 18 6.963616
Total 2101.081 29
*Significant at 0.01 level
The above table shows that result of Return of Net Worth Ratio between the Companies and
Years
Between the selected companies
The calculated F-value is more than the table value. So, the null hypothesis is rejected. The result
shows that there is significant difference in Return of Net Worth Ratio of selected companies. It
means that Return of Net Worth Ratio varies between the selected IT Companies.
Between the selected years
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In above table the calculated F-value is more than table value, so null hypothesis is reject the
result shows that there is significant difference in Return of Net Worth Ratio of selected years.
This implies that Return of Net Worth Ratio is fluctuated in different years.
It is concluded that Return of Net Worth Ratio varies between companies as well as between
years
References
Bortolotti, B.D., Souza, J.F., Antini, M., Megginson, W.L., (2012). Privatization and the
sources of performance improvement in the global telecommunications industry,
Telecommunications Policy, Volume- 13, July Pp. 465-474
Daga, A. and Parikh, A.(2013). Financial Performance Analysis of Forex Exposure of
Indian IT Sector with Special Reference to Tata consultancy Services Limited, Infosys
Technologies Pvt. Ltd. and Wipro Limited, Paripex- Indian Journal of Research,
Volume: 3
Davda, N.V. (2012). Comparative Study of Selected Private Sector Banks in India,
International Journal of Research in Commerce & Management, Vol.3 (7).
Sornaganesh, V., Maheswari, D (2014). Fundamental analysis of IT industry in India,
International Journal of Informative & Futuristic Research Volume -1 (8).
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Medical Tourism: A Paradigm in our Country
Pooja Rani Research Scholar, Department of Management, Desh Bhagat University, Mandi Gobindgarh
Abstract
Tourism over the years has cropped up to be the world‘s largest and fastest growing industry. It is a major
phenomenon of the modern society. Medical tourism is the travel of people to a place other than where they
normally reside for the purpose of obtaining medical treatment in that country. Traditionally, people would travel
from less-developed countries to major medical centers in highly developed countries for medical treatment that was
unavailable in their own communities. The recent trend is for people to travel from developed countries to third-
world countries for medical treatments because of cost consideration, though the traditional pattern still continues.
Health tourism is a wider term for travels that focus on medical treatments and the utilization of healthcare
services. It spans a wide field of health-oriented tourism ranging from preventive and health-conductive to
rehabilitation and curative forms of travel; the latter being commonly referred to as Medical tourism. India is a
leading player in the medical tourism/healthcare facilitation industry. It is increasingly emerging as the destination of choice for a wide range of medical procedures. This article examines the emerging of medical tourism in India
and what challenges it’s faced in the context of globalization. How these could be overcome by enhancing the
facilities of medical tourism.
Keywords: [Ayurveda, Medical Tourism, Naturopathy, Siddha, Unani, Yoga]
Introduction
“Tourism is like a bridge. It connects our countries and it can connect people to each other”. -
Karen Che
Medical Tourism can be broadly defined as provision of cost effective‖ private medical care in
collaboration with the tourism industry for patients needing surgical and other forms of
specialized treatment. This process is being facilitated by the corporate sector involved in
medical care as well as the tourism industry, both private and public (Sankaranarayanan, 2005).
Tourism in reality is not an industry but an activity. Tourism over the years has cropped up to be
the world‘s largest and fastest growing industry. It is a major phenomenon of the modern society.
Tourism development is perceived by almost all countries of the world as a potent ingredient in
the economic development strategies. It is considered as a quick and easy means to economic
development. Medical tourism is a new concept where two important service industries are
joining to attract people who seek healthcare services located
beyond the geographical territory of their country. It provides state of the art private medical care
in collaboration with tourism industry to patients from other countries. Medical tourism is
becoming a popular option for tourists across the globe. It encompasses primarily and
predominantly biomedical procedures, combined with travel and tourism. The term medical
tourism has been coined by travel agencies and the mass media to describe the rapidly growing
practice of travelling across international borders to obtain hi-tech medical care. Various
countries like Thailand, Malaysia, India, etc are promoting medical tourism aggressively. The
key competitive advantages of India in medical tourism stem from the following: low cost
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advantage, strong reputation in the advanced healthcare segment (cardiovascular surgery, organ
transplants, eye surgery etc.) and the diversity of tourist destinations available in the country.
The key concerns facing the industry include: absence of government initiative, lack of a
coordinated effort to promote the industry, no accreditation mechanism for hospitals and the lack
of uniform pricing policies and standards across hospitals.
Nowadays, a lot of factors draw people towards tourism. The important motivators for travel and
tourism may be cultural, social, interpersonal, physical, religious, and many more and now the
healthcare. Medical Tourism has much scope for development and it can develop certain
localities, states and even countries. A planned and integrated development of medical tourism
can act as a catalyst of the economic development of any country, more so, the developing
country, like India. Karnataka is one of the fastest growing states in India. It is the home to some
of the most high tech industries. Bangalore, in particular, has become the home to some of
India‘s premier hospital establishments. It is booming in terms of IT, BT and now, MT, that is
medical tourism. As Karnataka is endowed with a combination of high – tech super - specialty
hospitals on the one hand, on the other, it has a number of natural beauty spots. Further, the air
conditioned weather of Bangalore suits any foreign patient coming here for a treatment. The
surgeries in high tech hospitals are followed by rejuvenation therapies in Ayurveda spas or other
Indian systems of medicine.
Concept of Medical Tourism
Medical Tourism refers to an increasing tendency among people from England, the U.S., and
many other third world countries, where medical services are either very expensive or not
available, to leave their countries in search of more affordable health options, often packaged
with tourist attractions. Health and medical tourism is perceived as one of the fastest growing
segments in marketing Destination India’ today. While this area has so far been relatively
unexplored, we now find that not only the Ministry of Tourism, Government of India, but also
the various state tourism boards and even the private sector consisting of travel agents, tour
operators, hotel companies and other accommodation providers are all eying health and medical
tourism as a segment with tremendous potential for future growth (Fernandes, 2003). The service
sector is playing an ever increasing role in theglobal economy. One of the most significant
contributors to this growth has been tourism. It is linked with a host of ancillary services such as,
travel and hospitality, good infrastructure in areas like, telecom, financial services, and
entertainment. A host of organizations are involved in promoting tourism today. They are, -
WTTC at a global level, regional associations such as PATA, national tourism promotion boards
and state level tourism development corporations.
Significance of Medical Tourism
Medical tourism is an industry which combines healthcare services attached with tourist services
for the foreign medical tourists. Patients from one country travel to some other country seeking
specialized health services. Their travel is often combined with leisure and tourism. One of the
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major impacts of the New Economic Policy of 1991 on the Indian economy has been the
globalization of healthcare services. Since 1995 many foreign nationals are travelling to India to
seek quality healthcare facilities at low costs. Hence, India has become the destination for
medical tourism not only for medical tourists from neighboring countries, but also for patients
from Europe, USA, Australia, Africa and Arab countries.
Medical Tourism, is believed to become a major driver of economic growth in India, as first
world patients, driven out of their own systems by high costs and crowded conditions, look for
cheaper and better options for medical care (Hasan, 2003). India has proved itself to be a major
destination for health tourism, healthcare outsourcing and medical back office support. Main
medical destinations for patients from the US, UK, Canada and other European countries are
India, China, Taiwan, Thailand, Singapore and Malaysia. India is a leading player in the medical
tourist/healthcare Facilitation industry. It is increasingly emerging as the destination of choice
for a wide range of medical procedures.
Growth of Medical Tourism in India
In India, the rate of growth of Medical Tourism is tremendous compared to other Asian
countries. A combination of three vital factors quality, availability and cost has been
instrumental in kindling the unimaginable growth of this sector in our country (Shankari, 2007).
According to a study conducted by Confederation of Indian Industry and McKinsey in 2004,
some 150,000 foreigners visited India for treatment, with the number rising by 15 % a year
(RNCOS, 2003). India has emerged as the second fastest growing (8.8%) tourism economy in
the world over 2005-14 (World Travel & Tourism, 2004). There has been a growth of more than
13% in foreign tourist arrivals at 3.9 million during 2005, up from 3.4 million foreign tourists
who visited India during previous year. Foreign exchange earnings from foreign tourists were up
by more than 20% at $5,730.86 million in 2005, up from $ 4,769 million earned the previous
year.
There are numerous advantages of going to India for treatment. Some of the advantages of going
to India for medical treatment are:
Advantages of going to India for Medical tourism
Internationally accredited medical facilities using the latest technologies
Highly qualified Physicians/Surgeons and hospital support staff
Significant cost savings compared to domestic private healthcare
Medical treatment costs in India are lower by at least 60-80% when compared to similar
procedures in North America and the UK
No Wait Lists
Dedicated and Fluent English speaking staff
India is among the top 10 list of providing first world class medical procedures and state
of the art facilities
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Options for private room, translator, private chef, dedicated staff during your stay and
many other tailor made services
India is rich heritage culture that makes sound combination for the medical tourists with a
holiday/business trip
Information and live chats availability through internet
India has a very old civilization of more than 5000 years and is known for its cultural and
religious diversities with diverse geographical landmarks. In India, according to the famous
words “Atithi Devo Bhava” refers tourists are treated as God. In India, in addition to existence
of modern medicine, indigenous or traditional medical practitioners continue to practice
throughout the country. Popular indigenous healthcare traditions include Ayurveda, Siddha,
Unani, Naturopathy, and Yoga. Ayurveda provides a complete system of preventive medicine
and healthcare, which has been proven as its effectiveness over a long period in India. The
science of Ayurveda is based on the knowledge of the human constitution. If every individual
knows his or her own constitution, they can understand what constitutes a good diet and lifestyle
for themselves. The five great elements, viz., ether, air, fire, water and earth are manifested into
the three Dashas or biological organizations known as Vata, Pitta and Kapha. These biological
organizations are used by an individual to gain a full understanding of all aspects of body
functions, in order to establish the harmonious balance required for a healthy existence.
Ayurveda is based on natural herbs, which gives distinct advantage. The Siddha system defines
disease as the condition in which the normal equilibrium of the five elements in human beings is
lost resulting in different forms of discomfort. The diagnostic methods in Siddha medical system
are based more on the clinical acumen of the physician after observation of the patient, pulse and
diagnosis and clinical history. Unani system of medicine believes that the body is made up of
four basic elements viz., earth, air, water and fire, which have different temperaments i.e. cold,
hot, wet and dry. After mixing and interaction of four elements a new compound having new
temperament comes into existence i.e. hot-wet, hot-dry, cold-wet and cold-dry. Unani system of
medicine believes in promotion of health, prevention of diseases and cure.
Naturopathy has several references in the Vedas and other ancient texts, which indicate that these
methods were widely practiced in ancient India. Naturopathy believes that the human body
possesses inherent self-constructing and self-healing powers. Naturopathy differs slightly with
other systems of medicine, as it does not believe in the specific cause of disease and its specific
treatment but takes into account the totality of factors responsible for diseases such as one’s
unnatural habits in living, thinking, working, sleeping, or relaxation, and the environmental
factors that disturb the normal functioning of the body.
Yoga is a science as well an art of healthy living physically, mentally, morally and spiritually.
Yoga is believed to be founded by saints and sages of India several thousand years ago. Yoga has
its origin in the Vedas, and its philosophy is an art and science of living in tune with the
universe. Yoga, the art and science of maintaining physical and mental well-being, has its origin
in India. It is an instrument to self-evolvement and enlightenment, through physical and mental
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well-being. Various Yogic postures gently massage internal vital organs, keeping them in perfect
condition. Cholesterol levels are kept in check and the blood pressure is normalized. This
internal harmony cleanses and detoxifies the body and boosts the immune system. All these
traditional healthcare systems are attracting national and international patients, and generate
tourism flows.
Major Treatment Attracting Foreign Medical Tourists to India
Bone marrow transplant
Cosmetic Surgery
Dialysis and Kidney Transplant
Gynecology& Obstetrics
Joint Replacement Surgery
Neurosurgery & Trauma Surgery
Osteoporosis
Preventive Health Care
Refractive Surgery
Vascular Surgery
Cardiac Care
Nuclear Medicine
Urology
Eye Surgery
Dental Implant
Medical tourism in India holds great promise as an industry for the near future. Its contribution
to the revenues of private healthcare organizations and GDP is increasing steadily. However, a
focused strategic framework needs to be put in place in order to tap foreign medical tourists.
Medical tourism services – a term used to define the influx of foreign patients for health and
medical care packaged with tourism; are gaining momentum across countries such as Australia,
Switzerland, Germany, Canada, Cuba, Argentina, Malaysia, Singapore, Thailand and Indonesia.
Present Scenario of Medical Tourism In India
Today, medical tourism sector in India is witnessed a sudden boom in past few years. Foreign
tourist arrival in India is growing every year. The FTAs in India continue to grow, according to
ministry of tourism the total Foreign Exchange Earning (FEEs) through tourism during 2015,
2016 and 2017 were Rs.1,35,193 crore, Rs. 154,146 crore and Rs. 1,80,379 crore (provisional),
respectively. The growth rate of FTAs in India is registered as below:
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Year Foreign Tourist Arrival
(in millions)
FTAs in percentage
2013 6.97 5.9
2014 7.68 10.2
2015 8.03 4.5
2016 8.80 9.7
2017 10.18 15.6
India’s medical tourism sector was estimated to be worth us$ 3 billion. It is projected to grow to
$7-8 billion by the year 2020. According to the Confederation of Indian Industries (CII), the
primary reason that attracts medical tourists to India is the cost effectiveness and treatment from
accredited facilities at par with developed countries at much lower cost.
Comparative Rates of Medical Treatment
Medical
procedure in
US $
USA Singapore Poland Turkey Thailand Malaysia UAE India
Heart
bypass
123,000 17,200 14,000 13,9000 15,000 12,000 40,900 7,900
Heart Valve
Replacement
170,000 16,900 19,000 17,200 17,200 13,500 50,600 9,500
Hip
Replacement
40,364 13,900 5,500 13,900 17,000 10,000 46,000 7,020
Knee
Replacement
35,000 16,000 8,200 10,400 14,000 8,000 40,200 9,200
Spinal
Fusion
110,000 12,800 6,200 16,800 9,500 6,000 16,762 10,000
Dental
Implant
2,500 2,700 925 1,100 1,720 1,500 3,000 900
Source: Indian health care services
Above table present the data on the cost of medical procedure in India in relation to other
countries. It can be obtained from the table above.
Quality Service Provider
India has more than 25 hospitals that have been accredited by the Joint Commission
Accreditation for Hospital Organization (JCAHO). That ensures and follows the international
safety standards with state of the art facilities. The American Medical Association has made a
cost comparison study of healthcare in different countries. According to the statistics released by
AMA, a knee replacement surgery would cost $ 40,000in US, $10,000in Thailand and $13,000
in Singapore, while the same surgery would cost the person $8500 in India. That gives India a
certain edge when it comes to reasonable medical treatments. Moreover, Indian doctors are
renowned all over the world for their skills and proficiency. Apart from this, all tourists are
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treated as God according to the famous shlok “ATITHI DEVO BHAVA” and an equal treatment
and care is provided to all medical tourists.
Top Quality Service Provider hospitals are as follows:
Medanta Hospitals Gurugram, Kokilaben Hospital Mumbai, Hiranandani Hospital Mumbai,
Lilavati Hospital Mumbai, PGIMER Chandigarh, SankaraNethralaya (Eye specialist Chennai),
Tata Memorial Hospital (Cancer Specialist Mumbai), Fortis Hospital New Delhi, Apollo
Hospital New Delhi, AIIMS New Delhi, Columbia Asia Referral Hospital Kolkata, Bangalore,
Gujarat, Punjab, U.P, Maharashtra.
Technological Advancement
Indian hospitals are equipped with the latest technology. Government is facilitating many health
care programs with the support of technology as their backbone. Moreover the government has
built the standard for Electronic Medical Records (EMR). The most popular treatments seeks in
India by medical tourist are Cardiac bypass surgery, eye surgery, bone-marrow transplant, heart
surgery and knee replacement. Every treatment is conducted using the latest technology with
reliability. In addition, Government of India has launched tourist visa on arrival (TVOA) by
Electronic Travel Authorization on 27th November 2014for 43 countries. In this scheme 2968
VOA were issued. This initiative has directly helped to Medical tourists.
Challenges
There are many issues which are constrains factor for the development of medical tourism in
India. They are as follows:
Lack of government support
Lack of uniform medical policies and their complications
Hospitals need to tie-ups with insurance companies
Hospitals infrastructure need to be upgrade as per latest technology
Lack of emphasis on alternative system of Medicine (Yoga and Ayurveda)
Lack of training in hospital middle staff
Ministry of health and Ministry of tourism need to be work together to introduce policies
for Medical tourists
Low coordination with other facilities provider like airline operators and hotel industry
Conclusion
Many foreign medical tourists visit the hospitals like, Narayana Hrudayalaya, Apollo,
Wockhardt, Columbia Asia, Hosmat, Ramaiah Memorial, and Sagar for curative treatments.
They are cardiac, knee replacement, hip surgeries, rhinoplasty, etc. Some hospitals are also
known for cosmetic treatments. On the other hand, there are spas providing holistic, and
Ayurveda treatments like, Ayurveda gram, Jindal centre of Naturopathy, Golden Palms Resort,
and Soukya Spa which offer variety of Ayurveda, siddha, and naturopathy treatments. Number of
foreign medical tourists to India has been continuously increasing from 2000. The literature
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survey conducted and the primary data collected through various hospital visits reveal that the
most important contributing factors for the growth of medical tourism are, the availability of
world class medical facilities in Indian healthcare organizations, success rate of various
operations, lesser cost of the treatments, and availability of Ayurveda treatments. Medical
tourism as a phenomenon is just over a decade old in India. Yet, with the help of the above
discussed marketing strategies, it can become a very important medical tourism destination,
attracting foreign patients from all over the world. The cost of treatment, excellent climate,
infrastructure, range of medical packages and levels of expertise have all helped to make India
one of the most important medical tourism destinations in the world.
The growth of the medical tourism is difficult to predict due to political circumstances and world
economic. Based on the study it is concluded that medical tourism has shown tremendous
economic growth in the country. The data in the above discussion suggest that Singapore and
UAE where government is promoting medical tourism in the country where as government can
play a role of facility provider to determine which tourism products can be offered to whom.
Indian hospitals are receiving patients from both developed and developing countries who wants
to obtain the comparatively cost effective and high quality medical care in India.
References
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Impact of E-Commerce in Daily Life
Tanvi Jindal Research Scholar, Department of Management, Desh Bhagat University, Mandi Gobindgarh
Abstract India is among the fastest growing economy of the world. E-Commerce has become an important part of daily life.
Accessibility to e-commerce platforms is not a privilege but rather a necessity for most people, particularly in the
urban areas. As in 21st century as internet has become most important, frequently used and most necessary device, it
will surely race to achieve more growth and sales via internet. In India with the digital penetration has increased
significantly, according to statistical data internet use has increased to 429.23 million user in India and is expected to
reach around 830 million by year 2021. There has been significant rise of e-commerce in India. Internet plays an
important role in our daily life. We use internet daily almost for every single work. Before e-commerce buying and
selling were done without internet physically in the markets but after the arrival of e-commerce in India our life has
become more convenient because of its number of advantages. Online shopping is a part of e-commerce which is done mostly by the users due to e-commerce websites in India which allows us to buy and sell the products
according to our choice at affordable price. E-commerce websites have a lot of impacts on different markets and
retailers. In this paper we will discuss about the different markets and retailers and impacts of e-commerce on them.
E-commerce is a great platform not only to develop infrastructure but also increase employment rates in India and
thus overall impact in increasing economic and social growth in Indian economy. E-commerce (electronic
commerce or EC) is the buying and selling of goods and services or transmitting of funds or data, over an electronic
network primarily the internet but also all other activities which are associated with any transaction such as delivery
and payment facilitation.
Keywords: [E-commerce, Economic growth, Business, Traditional Commerce, Technologies, Electronic data]
Introduction
Electronic commerce or e-commerce has been defined as the ability to perform transactions
involving the exchange of goods or services between two or more parties using electronic tools
and techniques. The explosion of E-commerce has created new phenomena in our lifestyle
especially in shopping activities. Consumers can easily but products or services like magazines
and airlines tickets via internet.
Besides the earlier definition by Yonah (1997) in the paper, National Office for the information
Economy defines e-commerce as type of business transaction or interaction in which the
participants prepare or conduct business electronically. This covers the wide range of activities
ranging from use of electronic mail (e-mail) to internet based sales and transactions and web
based marketing. Placing “e” in front of any process or function seemed to be the magic
prescription for never ending story of success and rapid returns for enterprises. E-business, e-
procurement, e-sales, e-payment, e-banking, e-CRM, e-CAD, e-delivery are just a few. Internet,
for example is becoming one of the most popular medium in transmitting various data. Users can
find any kind of information within a shorter time compared with conventional method that
consumes more time. E-commerce is buying and selling of goods and services over the internet.
Before e-commerce buying and selling were done without internet physically in the markets but
after the arrival of e-commerce in India our life has become more convenient because of its
number of advantages. The advantages offered by e-commerce are online shopping of anything
at any time and at any place, customers can find the products on e-commerce websites which is
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no available in physical markets, it reduces cost and time, without stepping out from home we
can get our product at home.
Different Types of E-Commerce
The major types of E-Commerce are:
Business –to- Business (B2B): B2B e-commerce is simply defined as e-commerce between
companies. This is the type of e-commerce that deals with relationships between and among
businesses. About 80 per cent of e-commerce is of this type and most experts predict that B2B
ecommerce will continue to grow faster than Business to Customer segment.
Business –to- Consumer (B2C): commerce between companies and consumers involves
customers gathering information, purchasing physical goods (i.e. tangibles suchas books or
consumer products) or information goods (or goods of electronic material or digitized content,
such as software or e-books) and for information goods, receiving products over an electronic
network. B2C e-commerce reduces transactions cost (particularly search costs) by increasing
consumer access to information and allowing consumers to find the most competitive price for a
product or device.
Business –to- Government (B2G): Business –to- government e-commerce or B2G is generally
defined as commerce between companies and the public sector. It refers to the use of internet for
public procurement, licensing procedures and other government related operations. This kind of
e-commerce has two features: first, the public sector assumes a pilot/leading role in establishing
e-commerce and second it is assumed that the public sector has the greatest need for making its
procurement system more effective. Web-based purchasing policies increase the transparency of
the procurement process (and reduce the risk of irregularities).
Mobile Commerce (M-Commerce): M-commerce is the buying and selling of goods and
services through wireless technology i.e. hand held devices such as cellular telephones and
personal digital assistants (PDAs). Japan is seen as a global leader in m-commerce. Industries
affected by m-commerce include:
a. Financial services, including mobile banking (when customers use their handheld devices
to access their accounts and pay their bills) as well as brokerage services (in which stock
quotes can be displayed and trading conducted from the same handheld device)
b. Telecommunications, in which service changes, bill payment and account reviews can all
be conducted from the same handheld device
c. Service/retail, as consumers are given the ability to place and pay for orders on the fly.
d. Information services, which include the delivery of entertainment, financial news, sports
and figures and traffic updates to a single mobile device.
E-Commerce in Day to Day Life
It is an electronic business application and involves electronic fund transfer, supply chain
management, online transaction processing, e-marketing, corporate purchasing, value chain
integrations etc. with the onset of information technology the way we do business has changed. It
replaced from paper cheque or money to electronic payment system, from paper or postal invoice
to electronic invoice and from traditional commerce to electronic commerce etc. Flipkart.com
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and myntra.com were the most preferred choice of online retailers mentioned by the students to
shop from the online stores. Tickets, electronic goods accessories, apparels, books, electronic
goods, footwear, instant recharge of cell phone, gifting items were the major categories of
products / services bought by most of the students. Cash on delivery was the most preferred
mode of payment stated by the students while doing online shopping. In study conducted in India
on “Antecedents of Online Shopping Behavior in India: An Examination” found that Indian
student’s intention to purchase online is influenced by utilitarian value, attitude toward online
shopping, availability of information and hedonic values. Satisfaction, trust and commitment
were found to have significant impact on student loyalty towards online shopping in the study
carried out in Indonesia.
Impact of E-Commerce in Accounting Operations
Given the e-commerce process in most of the cases are found these specific types of income and
expenses: Revenue from sale customers; mailing services revenues; incomes from bank interests;
expenses for procurement of Information systems; expenses for creating a website presentation,
expenditure on goods; expenditure on packaging; advertising expenses; expenses for electronic
payment protocol; expenses for obtaining electronic signatures. It is a system that includes the
transactions that focus on the purchase and sale of goods but also transactions underlying income
generation such as creating demand for those goods and services and facilitating communication
between business partners. The expansion of e-commerce has generated a series of problems and
risks regarding taxation and other accounting of such operations. Another study analyzed the
potential development of e-commerce examining the influence of product type on consumer
behavior in internet shopping partners.
Impact of E-Commerce on Employment
In developed countries new generations are growing buying goods online and they are moving in
their prime spending years. In developing and less developed countries, incomes are rising and
the spread of mobile phones will likely bring more consumers online. What are the effects on
employment? Is online retailing creating enough jobs to offset the job losses in the traditional
retail sector? Different positions arise. According to Michael Mandel of the Progressive Policy
Institute between 2007 and 2017 the number of retail jobs shrank by 140,000 while those in e-
commerce and warehousing rose by about 400,000. Martin Ford points out in his book three
major forces will shape unemployment in the retail sector such as the disruption of the industry
by online retailers (e.g. Amazon, ebay, Netflix), the growth of fully automated self- service retail
sector (intelligent vending machines and kiosk), the introduction of increased automation and
robotics into stores (and warehouses). These forces will create jobs and trigger a shift in the
employment from traditional retail jobs warehouses, delivery, programming and technical
maintenance. However, this is not straight forward; workers may not have the competences or
skills to adapt to these changes.
Impact of E-Commerce on Business
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E-Commerce is changing manufacturing systems from mass production to demand-driven and
possibly customized, just-in-time manufacturing. Furthermore, the production systems are
integrated with finance, marketing and other functional systems as well as with business partners
and customers. Using web-based ERP systems, orders that are taken from customers can be
directed to designers and to the production floor within seconds. Production cycle time is cut by
50 per cent or more in many cases, especially when production is done in a different country
from where the designers and engineers are located. Companies like IBM, General Motors, are
assembling products for which the components are manufactured in many locations (13). Sub-
assemblers gather materials and parts from their vendors and they may use one or more tiers of
manufacturers. Communication, collaboration and coordination become critical in such multitier
systems. Using electronic bidding, assemblers get sub-assemblies 15 per cent to 20 per cent
cheaper than before and 80 per cent faster.
E-Commerce and online shopping in India is getting a noticeable growth as more usage of
internet facilities, high educational standards, changing life style and economical growth of the
country reasons in the demand of e-commerce techniques and tools. Versatile shopping
experience and rapid development of transaction facilities is further boosting opportunities for
the remaining market segments. The biggest advantage of e-commerce is the ability to provide
secure shopping transactions via internet and coupled with almost instant verification and
validation of credit card transactions. E- Commerce also enables consumers and companies to
gain access to worldwide markets and also to improve the level of customer service, speed the
flow of goods and information, reduce transaction costs etc. the developing countries face a
number of challenges in utilizing the benefits in raising incomes and trade flows in the area of e-
commerce.
Conclusion
From the above discussion we can easily put-forth that commerce has gone through
revolutionary changes to keep pace with changing world. In this wake, it has traveled phase of
traditional commerce to e-commerce. E-commerce had played game changing role for businesses
around the world. According to survey after demonetization, role of cashless economy in India
has increased significantly, thus the role of internet also likewise other such government policies
have also had a major impact. A lot have been done and a lot has to be done when it comes to e-
commerce industry in India. It provides convenience to customers and allows the enterprise to
expand their business over internet. E-Commerce has good impact on markets like reduce the
cost of advertisements as many customers can attract through internet, new brands can be
developed, can maintain a good relationship with customers and can make customized products
according to customer’s needs. But e-commerce has bad impact on offline retailers because
customers buys on low price from online shops due to which they also have to lower their price
and does not get any profit, retailers cannot maintain a large stock like online shops have stores
because it will cost a huge loss to them. They have to spend more money in offline
advertisements to attract customers. Along with the impacts e-commerce also offers some
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limitations in terms of markets and retailers that is website cost, to create and maintain a website
a lot of money is required; infrastructure cost, to fulfill the orders online retailers have to
maintain a large stock in a big warehouse which costs a lot; security and fraud, due to popularity
of online shops criminal elements are also attracted to them who can hack the personal
information and can misuse them; customer trust, it is difficult for customers to trust a new brand
without looking, touching and face-to-face interaction.
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