but themselves bear a debt-equity ratio far too contrary to that of their borrowers! Simply put, banks earn by undertaking risk on their depositors and creditors instead of on their shareholders. Hence, one of the major purposes of bank regulation is to make banks hold adequate capital to meet the risk of losses.

The financial soundness of banks, undeniably, has a major sway on the financial system stability as a whole, as the banking system constitutes around 75% of the financial markets in India. A key factor that supported the Indian banking system to the adverse effects of the global financial crisis was its robust capital adequacy. Adequate bank capital has several benefits: (i) It acts as a buffer that absorbs the losses and thereby protects the depositors; (ii) It shields the bank creditors in the case of bank-runs; (iii) It enhances the ownership stake by increasing shareholders' "skin in the game" and incentivizes better risk management; (iv) It contributes to lower systemic risk; (v) It helps attract funds and bondholders; (vi) It lowers bank leverage and the risk of bank bankruptcies; and (vii) It helps in overcoming moral hazard problems to a considerable extent. Research shows that better-capitalized banks tend to achieve greater profitability and customer confidence. Adequate bank capital lowers the probability of default. Higher bank capital implies lower debt costs for banks, hence higher return on equity. Besides, well-capitalized banks gain a higher market share and a greater probability of survival. The first paper, "Do Banks with High Capital Adequacy Perform Better? Evidence from Scheduled Urban Cooperative Banks in India", provides an interesting analysis of how capital adequacy is associated with performance in the case of Urban Cooperative Banks (UCBs). The authors, Ashish Srivastava and Nitu Saxena, investigate if the banks with high capital adequacy perform better. In doing so, the authors study a sample of 50 UCBs clustered into five groups, based on their mean capital adequacy ratios, over three years. The study reports that UCBs with low capital adequacy or those with capital ratios just equal to the regulatory requirement does not show better performance. However, UCBs with higher capital adequacy even though exhibit higher margins, are found to be inefficient in leveraging their capital. The study observes that an optimal capital adequacy ratio of around 15% is necessary to improve the return on equity of UCBs and improve their performance and financial soundness. Simply put, the study argues that regardless of the level of their regulatory capital ratios, UCBs do not earn sufficient returns on their equity and hence, might face the 'problem of overcapitalization'.

Capital formation is crucial for the banks in enhancing their business and outreach. To gather higher capital one of the approaches can be to minimize the cost of credit. In the second paper, "Does Cost Efficiency Influence Bank Capital Formation and Cost of Bank Credit? Evidence from China and India", the authors, Mohammed Mizanur Rahman and Mohammad Mizanour Rahman, examine two hypotheses: (i) There is a significant positive relationship between cost efficiency and regulatory capital formation, and (ii) There is a significant negative relation between cost efficiency and the cost of bank credit. The authors employ a sample comprising a panel of bank-level data from two emerging economies India and China over the period 2007-2015. The study finds that cost efficiency positively impacts bank capital formation and negatively affects the cost of bank credit. Hence, the study argues that cost efficiency can help banks to gather capital by way of profits. The study notes that the global financial crisis has significantly influenced the rise in the bank capital adequacy ratios and cost of bank credit. Further, the study finds that the Chinese banks are more cost-efficient and highly concentrated compared to Indian banks.

The final paper, "Financial Technology and the Evolving Landscape of Banking and Financial Sector", explores the evolving financial sector and the transformative financial technologies. The author, Abdul Quddus, surveys the emerging area of FinTech applications like lending and payments services, big data analytics on customer and risk management, and blockchain applications. The review observes that traditionally, banks have neither been the pioneers nor the drivers of technological innovations in financial services and products. However, technology-driven financial services are greatly transforming the very nature of banking. The fast-changing innovations in the domains like payments, lending, credit assessments, etc., are mostly driven by big data analysis. The review notes that fast-emerging FinTech firms and digital disruptors have started eating the business pie of the banks. In the light of the rapid rise of FinTech, this review draws the attention of the stakeholders to assess the gaps in the banking technology infrastructure and adapt to the new technologies to drive the business strategies for resilient growth.