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Title: Non-performing assets and profitability of Indian banks: an econometric study

Authors: Deepak Tandon; Arvind Chaturvedi; Harishankar Vidyarthi

Addresses: International Management Institute, B-10, Qutab Institutional Area, New Delhi-110016, India ' International Management Institute, B-10, Qutab Institutional Area, New Delhi-110016, India ' International Management Institute, B-10, Qutab Institutional Area, New Delhi-110016, India

Abstract: The diminishing profitability of the Indian banking industry is owing to added stressed assets, wilful defaulters, and loss making assets depict massive bleeding of their balance sheets. The after effects can be now seen through the regulators implementing strictest vigilance, follow up with the banks, recovery measures such as Bankruptcy laws 2016, corporate debt restructuring (CDR), high provisioning, and heavy pecuniary penalties to the defaulters. The authors have estimated bank specific, macroeconomic determinants of the non-performing loans and their impact on the banking profitability. Multivariate panel data analysis for 35 Indian public and private sector banks over the period 2007-2016 has been done using panel data through fixed effect regression and modified ordinary least square and system GMM approach has been deliberated. Detailed estimation results in public vs. private sector banks have been given the conclusion. The NPA management in PSU banks needs attention as it affects the efficiency and profitability exponentially.

Keywords: bank credit; corporate debt structuring; CDR; the securitisation and reconstruction of financial assets and enforcement of security interest act; SARFAESI; asset quality review; AQR; panel data regression.

DOI: 10.1504/IJBCG.2017.087529

International Journal of Business Competition and Growth, 2017 Vol.6 No.1, pp.60 - 76

Received: 22 Feb 2017
Accepted: 28 Mar 2017

Published online: 13 Oct 2017 *

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