Systemic Risk in Indian Banking: Measurement and Impact of COVID-19

Abstract

This study examines the systemic risk in the Indian banking system using two models. The systemic risk cube explains the importance of measuring systemic risk in a scenario like contagion and systemic risk measurement index SRISK as proposed by NYU stern. Measurement of SRISK is done for two time-periods: before COVID-19 i.e. February 2020 and after COVID-19 i.e. February 2021. The findings show that the COVID-19 pandemic has not shown increase in SRISK considerably unlike 2009 crisis when the SRISK increased considerably, causing an economic downturn. The banking system remains a vital part for economic stability and studying the financial system to scale its impact on the economy during extreme events like in a pandemic remains an unflinching necessity of the time

Keywords

• risks in banking
• srisk
• economic stability