To read the full version of this content please select one of the options below:

The Causal Factors behind Rising Non-performing Assets of India’s Commercial Banks: A Panel Study

Advances in Pacific Basin Business, Economics and Finance

ISBN: 978-1-78973-286-3, eISBN: 978-1-78973-285-6

ISSN: 2514-4650

Publication date: 21 August 2019

Abstract

Poor performance of India’s commercial banks, in the public and private sectors as well as those owned by foreign interests, has been a major concern of the policymakers. Their gross non-performing assets (NPAs), as a proportion of gross advances, were 10.2% as of March 2017, which is reported to have grown to 11.6% in March 2018. The public sector banks (PSBs) have a share of 70% of business, and the ratio of NPAs to gross advances is 15.6%. The Reserve Bank of India’s forecast is that the ratio for PSBs would rise to 17.3% by March 2019, of private banks to 5.3%, and of foreign banks to 4.8%. This chapter focuses on causal factors which comprise macroeconomic as well as bank-specific factors, influencing NPA. We undertake a panel approach by using 16 annual observations (from fiscal year 2000–2001 to 2015–2016) for three groups of banks by ownership: public, private, and foreign. The study findings reveal that the macroeconomic and bank-specific factors are important determinants.

Keywords

Citation

Jayaraman, T.K., Lee, C.-Y. and Ng, C.-F. (2019), "The Causal Factors behind Rising Non-performing Assets of India’s Commercial Banks: A Panel Study", Advances in Pacific Basin Business, Economics and Finance (Advances in Pacific Basin Business, Economics and Finance, Vol. 7), Emerald Publishing Limited, Bingley, pp. 201-212. https://doi.org/10.1108/S2514-465020190000007008

Publisher

:

Emerald Publishing Limited

Copyright © 2019 Emerald Publishing Limited