Non-performing assets: drag for stability of Indian banking sector Online publication date: Mon, 22-Feb-2021
by Dolly Gaur; Dipti Ranjan Mohapatra; Pratap Ranjan Jena
International Journal of Economics and Business Research (IJEBR), Vol. 21, No. 2, 2021
Abstract: The positive and strong performance by banks is imperative for stable growth of Indian economy. However, non-performing assets (NPA) of banks are proving to be a substantial hurdle for India becoming a strong and stable economy. Thus, the present work is an attempt to find and analyse the factors influencing NPA trends. The proposed model for the mentioned subject matter comprises of a set of varied bank-specific, industry specific and macroeconomic variables. The study includes some less used factors like, technical efficiency indicating bank performance, which has been measured using stochastic frontier model, and funding risk. Considering the time frame of 14 years (2005-2018), 46 scheduled commercial banks in India have been studied. For the purpose of analysis 2-step system generalised method of moments approach has been followed. The findings indicate that NPA in India are time persistent and get discouraged by positive bank performance.
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