TY  - JOUR
AU  - Thyagarajan, V. 
AU  - Mohamed, Saiful Maznan Bin 
PY  - 2005
TI  - Retail Banking Loan Portfolio Equilibrium Mix : A Markov Chain Model Analysis
JF  - American Journal of Applied Sciences
VL  - 2
IS  - 1
DO  - 10.3844/ajassp.2005.410.419
UR  - https://thescipub.com/abstract/ajassp.2005.410.419
AB  - The variance analysis of actual loan sanctions with the non-documented method of loan
allocation of the selected retail bank, over a period of 24 months, revealed that there is a scope to
improve their income earnings. Realizing its importance Markov Chain Market Share model was
applied to inter temporal data of loan disbursements of the selected bank. By applying Estimate
Transition Matrix, scope for probability of loan switching among its types was calculated to suggest
the probable mix of loan portfolio. From the results it was suggested that the loan proportions among
various types were as follows: Housing (32.0 %), Others (28.1 %), Business (20.0 %) and Education
(19.7 %). These proportions can be taken as guideline percentage within the government norms for the
priority sector. Simulation studies were also done to calculate the expected income of interest using
Markov proportions and compared with the actual interest earnings to prove the superiority of the
model.