An analysis of shareholder value creation in Indian banks

Abstract

Shareholder value maximization is currently the most important comprehensive management tool in use. For a bank, the shareholder value approach is not only an important strategic management tool; its overarching objective of shareholder value maximization is vital for banks to exist. Unlike non banks, banks are required to secure their business with equity capital. Consequently, the provision of equity capital is conditional for the growth of banks business volume and therefore is a highly critical function for banks. As higher shareholder value eases access to equity capital, a shareholder value orientation is especially important for banks. Despite its relevance to banks, the shareholder value approach has only recently gained importance in the banking industry.