Impact of efficiency and ownership concentration in Indian banks on their NPAs: a panel data analysis

Jagjeevan Kanoujiya and Shailesh Rastogi

Afro-Asian Journal of Finance and Accounting, 2024, vol. 14, issue 3, 317-338

Abstract: Non-performing assets (NPAs) in banks are a serious issue and have attracted considerable academic research attention. This study contributes to banking literature by assessing banks' technical efficiency (TE) by applying data envelope analysis (DEA) and NPAs for the sample of 34 banks in India from 2016 through 2019. This study empirically investigates the impact of technical efficiency and ownership concentration on NPAs of Indian banks by applying both static and dynamic panel data models. Ownership concentration is taken as the proportion of the holdings of promoters (promo), the institutional investors (iih) and retail investors (rih). The static model's findings reveal that TE has a positive association with NPAs, while in the dynamic model, TE surprisingly has no impact on NPAs in Indian banks. Both models indicate ownership concentration has a mixed effect on NPAs depending on holdings. This study provides important insights into bank performance leading to economic growth.

Keywords: dynamic panel data; DEA; non-performing asset; NPA; banks; ownership. (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ids:afasfa:v:14:y:2024:i:3:p:317-338

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