2022 рік

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Non-performing assets and profitability: case of Indian banking sector
(Київський національний економічний університет імені Вадима Гетьмана, 2022-06) Bhatnagar, Mukul; Özen, Ercan
Introduction: The Indian banking industry is currently facing a difficult time in the context of a rising trend in non-performing assets (NPAs) that is challenging its power and resilience. Aim:The purpose of this analysis is to analyse the NPA-profitability relationship for the Indian banking sector to assess the severity of NPAs’ effect on bank profitability. Other bank-specific, industry-specific and macroeconomic variables that influence banking benefit were also taken into account. Method:For the purpose of the appropriate study a balanced panel of data comprising all Indian banks over a period of 8 years (2011–2018) has been used. Fixed effects and random effect panel regression models have been drawn. Findings: There is a strongly unfavorable association between NPA and the profitability measure: asset return (ROA). The results of the study identified NPA as the biggest detractor of the income of the banking industry because NPA has the highest negative regression coefficient. It means that decreasing credit quality hinders and causes banks to fail.