<abstract xmlns="http://www.w3.org/1999/xhtml"><p> The main objective of the paper is to find out the determinants of NPAs in the Indian Banking sector and to study if these determinants vary across the three different ownership structures viz., public sector banks (PSBs), private banks (PBs) and foreign banks (FBs), of banks in India. The panel data for all the banks from 2005 to 2014 is collected from the official website of Reserve Bank of India (RBI), the Central Bank of the country. The econometric technique of Fixed Effects model and Random Effects model is used for the purpose. The results reveal that Macro economic factors, like log of percapita income (LPCY) and Inflation (INFN), are significantly affecting NPLs in Public Sector Banks (PSBs). In case of private banks (PBs) LPCY is highly significant while bank specific variables like size and total loans to total loans of the banking sector (TLTLBS) are significant at 10% level. For FBs none of the variables were significant.</p></abstract>

The main objective of the paper is to find out the determinants of NPAs in the Indian Banking sector and to study if these determinants vary across the three different ownership structures viz., public sector banks (PSBs), private banks (PBs) and foreign banks (FBs), of banks in India. The panel data for all the banks from 2005 to 2014 is collected from the official website of Reserve Bank of India (RBI), the Central Bank of the country. The econometric technique of Fixed Effects model and Random Effects model is used for the purpose. The results reveal that Macro economic factors, like log of percapita income (LPCY) and Inflation (INFN), are significantly affecting NPLs in Public Sector Banks (PSBs). In case of private banks (PBs) LPCY is highly significant while bank specific variables like size and total loans to total loans of the banking sector (TLTLBS) are significant at 10% level. For FBs none of the variables were significant.

Macroeconomic and Bank Specific Determinants of Non-Performing Loans (NPLs) in the Indian Banking Sector

Studies in Business and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

The main objective of the paper is to find out the determinants of NPAs in the Indian Banking sector and to study if these determinants vary across the three...

Macroeconomic and Bank Specific Determinants of Non-Performing Loans (NPLs) in the Indian Banking Sector

Published Online: Oct 21, 2017

Page range: 125 - 135

DOI: https://doi.org/10.1515/sbe-2017-0026

© 2017

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.