Open Access
American Research Journal of Business and Management
ISSN (Online): 2379-1047
DOI: 10.46568/arjbm
Sentiment in RBI Financial Stability Reports A Little Ado About Something
1Assistant Director, Indian Economic Service, Government of India
2Member of Faculty, Reserve Bank Staff College, Reserve Bank of India (RBI).
3Manager, Monetary Policy Department, Reserve Bank of India (RBI).
4Manager, Department of Economic and Policy Research, Reserve Bank of India (RBI).
5Manager, Department of External Investments and Operations, Reserve Bank of India (RBI).
Anshuman Kamila, M. Sreeramulu, Aastha, Shahbaaz Khan, Aniket Ranjan, “Sentiment in RBI Financial
Stability Reports”, American Research Journal of Business and Management, Vol 9, no. 1, 2023, pp. 20-28.
Abstract
An attempt is made in this article to analyse the text published in RBI Financial Stability Reports (FSRs) over the period
June 2010 to December 2021 using text mining tools. We construct a Financial Stability Sentiment (FSS) Index by linking
the FSR with a dictionary specially developed for capturing the sentiments published in FSRs. We find that the FSS
index perfectly tracks stress episodes such as economic deceleration, Asset Quality Review (AQR) process and COVID
19 pandemic, i.e., during these periods, the value of the index increased significantly – signalling bloated stress in the
financial system in India. Moreover, there is a significant negative correlation between the index and the market returns
that consistently captures the large upswings and downswings in the former. Consequently, the FSS index is a reliable
economic barometer as it is able to capture most of the events which had an impact on financial sector of the economy,
while also having an impact on consumer perceptions.
