Impact of Brand Value on Financial Performance of Banks: An Empirical Study on Indian Banks

Sangeeta Arora, Neha Chaudhary

Universal Journal of Industrial and Business Management 4(3): 88-96, 2016

Abstract:

This research focuses on the investigating the impact of brand value on various financial indicators on of
banks.

Introduction:

The biggest challenge for the banking industry is to tangibilize the intangible banking experience. This
can be achieved by creating of strong brands. It has revealed high brand value provide high financial
returns, shareholder value and profitability etc, which eventually resulted into superior financial
performance. The need for brand valuation caught fame in 1980s when a wave of brand acquisitions
resulted in large amount of goodwill. Countries like UK, France Australia and New Zealand, recognized
the value of acquired brands as intangible assets, and reflected these on the balance sheet of company.
Brands are one type of intangible asset which have indefinite useful economic lives.

Main Reasons behind Selecting Brand Finance:

Brand Finance provides impartial and independency because they have no vested interested and
collaborated with more consultancies and agencies. Brand Finance provide high technical standards. It
also provide to openly collaborative and flexible with their clients in revealing the details of analysis.
Brand Finance possesses a unique combination of skills and experience. It employs functional experts
with marketing, research and finance.

Data and Methodology:

The study has been done via quantitative study and based on brand value of Indian banks. Top 10 banks
listed by Brand Finance taken as sample. Five Brands selected on the basis of highest Brand Finance
value from Public sectors as well as from Private Sector. Later applied different regression analysis has
been applied on the data to find the relationship between Brand Value on ROA, ROW, ROI, Stock Prices
and EPS.

Conclusion:

The Research suggested that there is strong relationship between ROA, ROE, Stock Prices and EPS with
Brand Value. It indicates that having strong Branding Finance can enhance financial performance of
bank. The study revealed negative influence of brand value on ROA, ROE and ROI which shows that
excessive advertising and media prominence leads to increase in the brand value of banks but decreases
its return. So banks required to keep an eye on their brand investments because excessive expenditure
on brand leads to decrease in the return on equity.
The Impact of Brand Value on Financial Performance

Feng Jui Hsu, Tsai Yi Wang, and Mu Yen Chen

Advances in Management & Applied Economics, vol. 3, no.6, 2013, 129-141

Abstract:

This article examines relationships between Brand value and stock performance of companies. It tries to
indentify the relationship between stock value and performance strong brands on market index.

Introduction:

Brands are company's most valuable intangible asset and several brand managers have priority focus on
development of brand. Brand equity incorporates brand properties like brand name, awareness, loyalty,
perceived brand quality and favorable brand symbolism. It is key factor while creating firm's competitive
advantage and important for future earnings stream. Several studies find different relationships
between Brand values and stock performance. For instance, Kerin et al. (1998) find there is positive
relationship between brand values and market to book ratios of American consumer goods companies.
This study explores relationship between brand value and brand portfolio performance by examining
the impact of perceived brand quality on corporate value. Brand is an intangible asset of a firm which is
very mcuh difficult to calculate and express in balance sheet. Here the purpose to check the impact of
brands on investment portfolio performance to construct improved investment strategies and to
identify criteria power of different intangible assets in different window periods.

Methodology:

For this study, we have collected data from 100 Best Global Brands annual survey by Business Week. The
data has been collected of 10 years from 2001 to 2010. While monthly returns and firm industry codes
were extracted from CRSP data base. S&P 500 index used as benchmark with monthly returns obtained
from database. Analysis is divided into two parts, first observes the market impact of announcements
over seven month trading window following annual publication. Second is to assess the empirical
description of our research statistical significance of our investment portfolio.

Conclusion:

Different researches have been done previously to find relationship between brands and other
intangible assets and stock performance. This study also examines a relationship between brand value
and stock performance. It shows there is a positive correlation between stock performance and brand
value. For this study, we have collected data from 100 Best Global Brands annual survey by Business
Week. The data has been collected of 10 years from 2001 to 2010. While monthly returns and firm
industry codes were extracted from CRSP data base. S&P 500 index used as benchmark with monthly
returns obtained from database. Analysis is divided into two parts, first observes the market impact of
announcements over seven month trading window following annual publication. Second is to assess the
empirical description of our research statistical significance of our investment portfolio. If investors
consider firms safety-related item in their portfolio, they will earn excess return in the long-term.