REVIEW OF LITERATURE

1. Flannery and James (1984) discussed the use of asset liability management tools to
maximise the benefit of tax shields in an effort to maximize profits. The results show that
the banks will adjust their maturity gaps between loans and deposits in some situations to
take advantage of tax shields and improve profits.

2. Giokas and Vassiloglou (1991) developed a goal-programming model for bank

asset and liability management. They supported the idea that apart from attempting
to maximize revenues, management tries to minimize risks involved in the allocation of
the bank’s capital, as well as to fulfill other goals of the bank, such as retaining its market
share, increasing the size of its deposits and loans, etc.

3. D Gosh Roy (1995) in an article points out that ALM as a tool for increased profitability
and managing interest rate volatility have been in vogue in the international banking
scenario in the late seventies. With the process of globalisation and deregulation
setting in, Indian banks could no longer shy away from managing their assets and
liabilities more so in the short run.

4. O P Chawla (1998) opined that ALM has evolved from the early practice of managing
liquidity on the bank's asset side, to a later shift to the liability side, termed liability
management, to a still later realization of using both the assets as well as liabilities sides
of the balance sheet to achieve optimum resources management. But that was till the
1970s. In the current decade, ALM covers the management of the entire balance sheet of
a bank.

5. Madhu Vij (2005) attempts a case study of four banks- Citi bank, ICICI bank, IDBI bank
and SBI and studies how Asset Liability Management can be used as an important tool
for managing liquidity risk and interest rate risk. The traditional gap analysis is used for
measuring the risks. Measuring and managing liquidity risk is an important
dimension of ALM. Mismatch in the maturity profile of assets and liabilities exposes the
balance sheet to liquidity risk.

6. Pramod Vaidya and Arvind Shahi (2005), and Dr. Anurag B Singh and Ms. Priyanka
Tandon (2012) discusses in depth, the importance of liquidity risk management and
interest rate risk management, various methods of measuring these risks and the
challenges faced by Indian banks in managing these risks.

7. Parvinder Arora, Ajay Garg, and Bhavna Ranjan (2007), examines the ALM practices of
six banks, using the tool of Duration GAP Analysis by looking at interest rate sensitivity
statements for the period 2000-04. They concluded that the practice of ALM is the
solution to most of the problems faced by banks in the recent times. It is the most
scientific way to deal with the challenges put forward by the liberalization and the
globalization of the financial services sector.
8. Aruna Saini and Ram Dhan Saini (2010) carried out the study “Analysis of Liquidity
Management and Trade Off Between Liquidity, Risk and Profitability – An Empirical
Study” with the objectives like measuring and evaluating the efficiency of liquidity
management by using the ratio analysis, comparing the liquidity position of the
company from year to year by applying motaal’s comprehensive test.

9. Mihir dash, K.A. Venkatesh and Bhargav B.D. (2011), analysed asset-liability
management in banks operating in India by determining the liquidity position of banks in
India through maturity profiling. The results of the study suggest that, overall; public
sector banks had a better short-term liquidity position than the private sector banks and
foreign banks.

10. Dr. Kanhaiya Singh (2013) attempted to analyze the impact of measures and strategies
banks undertook to manage the composition of asset-liability and its impact on their
performance in general and profitability in particular. Maturity profiling is used to
determining the liquidity position and Duration analysis to measure interest rates risk.

11. Md. Salim Uddin, & Anamul Haque (2016) There is no underlying fact to ignore the importance
of asset-liability management policy to ensure profitability and long-run sustainability of
financial institutions in any economy. The study has been conducted to investigate the impacts
of ALM policy on the profitability of sample banks working in Bangladesh. The rationality of this
study is to observe the degree of relationship of different assets and liability variables with
profitability through applying Statistical Cost Accounting (SCA) model using time series data
from 2003 to 2014. To identify the relationship among the variables. After analysis, Loans &
Advances is found to have a significant positive relationship with banks' profitability.

12. Dr. Anurag b Singh*; ms. Priyanka Tandon (2012) Asset-Liability Management (ALM) is one of
the important tools of risk management in commercial banks of India. The banking industry of
India is exposed to number of risk prevailed in the market. The research paper discusses about
issues in asset liability management.

13. Mr. Chetan Shetty1 Ms. Pooja Patel 2, Ms. Nandini3 (2016) Assets and Liability Management
(ALM) is a systematic and dynamic process of planning, organising, coordinating and controlling
the assets and liabilities or in the sense management of balance sheet structure in such a way
the net earnings from interest are maximised within the overall risk preference of the banks.
This study examined the effect of ALM on the Five Private Sector Banks profitability in Indian
financial market by using Gap Analysis and Ratio Analysis Technique. The finding from the study
revealed that banks have been exposed to liquidity risk.

14. Prabhakar 1, Dr. S. Mathivannan 2, J. Ashok kumar 3(2017) In India asset liability of the banks’
balance sheet of commercial banks posed serious challenges as the banks, which have direct
impact on their operations, profitability and efficiency to compete with. The RBI of the country
focused and advised banks for taking concrete steps in minimizing the mismatch in the asset-
liability management. There had been many positive impacts of various strategies followed by
banks in the last one decade.
15. S. P. Joshi1 & Dr. R. V. Sontakay (2017) Asset and Liability Management (ALM)plays key role in
banking and finance industries. Any bank or financial industry will collapse without the use of
ALM tactics. Therefore, to survive in the market, the ALM analysis is carried out timely by these
industries to measure the value of risk factors involved. ALM analysis not only minimizes the risk
but also it helps to achieve the financial goals of the industry. In this paper, we present a survey
of various ALM techniques reported in the literature, aiming to financial stability. The survey
helps for emerging banks to decide the different ALM process used by the banking industries
and to select the efficient process out of the reported techniques.

16. The Basel II norms (2004) focused on international standard for the amount of capital to be
maintained by banks as a safeguard against various risks they come across in the banking
business. Basel II proposed setting up rigorous risk and capital management requirements
designed to ensure that a bank holds capital reserves appropriate to the risk the bank exposes
itself to through its leading and investment practices. It infers that the greater risk to which the
bank is exposed, the greater the amount of capital the bank needs to hold to ensure solvency
and stability.

17. Gardner and Mills (1991) discussed the principles of asset-liability management as a part of
banks’ strategic planning and as a response to the changing environment in prudential
supervision, e-commerce and new taxation treaties. Haslem et al (1999) used canonical analysis
and the interpretive framework of asset/liability management in order to identify and interpret
the foreign and domestic balance sheet strategies of large U.S. banks in the context of the “crisis
in lending to LDCs.” In their study it was revealed that the least profitable very large banks have
the largest proportion of foreign loans, but they focus on asset/liability matching strategies.