Bank-specific determinants of nonperforming assets of Indian banks

Samaresh Bardhan () and Vivekananda Mukherjee
Additional contact information
Samaresh Bardhan: Indian institute of Technology

International Economics and Economic Policy, 2016, vol. 13, issue 3, No 10, 483-498

Abstract: Abstract The paper examines the role of bank-specific variables in explaining the dynamics of non-performing assets (NPAs) of Indian banks in a panel data framework over the post liberalisation period, 1995–2011. The results have been derived after controlling for macroeconomic factors like real GDP, inflation, exchange rate etc. Applying several variants of Generalized Method of Moments (GMM) technique in dynamic models, we find that that there is significant time persistence of NPAs in Indian banking system. We also find that larger banks are more prone to default than smaller banks. We find support for the ‘bad management hypothesis’ as we observe that an increase in profit level of the banks reduces NPAs in the next period. Lagged capital adequacy ratio as an important prudential indicator also significantly reduces current NPAs of banks. The paper also draws some important policy implications about NPA management.

Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://link.springer.com/10.1007/s10368-016-0344-4 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:iecepo:v:13:y:2016:i:3:d:10.1007_s10368-016-0344-4

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10368/PS2

DOI: 10.1007/s10368-016-0344-4

Access Statistics for this article

International Economics and Economic Policy is currently edited by Paul J.J. Welfens, Holger C. Wolf, Christian Pierdzioch and Christian Richter

More articles in International Economics and Economic Policy from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().