Analysing critical indicators of non-performing assets among small and medium enterprise - multi-criteria decision making approach

Susil Kumar Kanagaraj Victor, Senthil Arasu Balasubramanian and Sivakumar Sundararajan

International Journal of Indian Culture and Business Management, 2024, vol. 32, issue 2, 151-163

Abstract: Non-performing assets (NPA) of SMEs are a phenomenon that ceases the income of financial institutions (FIs). In this study, various pragmatic factors contributing to the slippage of performing assets of SMEs leading to distress in Indian FIs are analysed and prioritised accordingly using multi-criteria decision making (MCDM) technique called analytical hierarchy process (AHP). This study is based on primary data collected through a structured questionnaire from employees of different levels from Indian manufacturing SMEs. The empirical result of this study shows that out of 15 identified factors that influence the NPA for SMEs, three critical factors are deemed to be significant early-warning signals for NPA: a decrease in sales turnover, a decrease in production and a decrease in profit. Also, it suggests that implementing potential monitoring and control system can avoid SMEs slipping towards NPA. These findings have important implications for FIs, SMEs and policymakers to manage SMEs' NPA proactively.

Keywords: non-performing assets; NPA; small and medium enterprises; SMEs; multi-criteria decision making; MCDM; analytical hierarchical process; Indian financial institutions. (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijicbm:v:32:y:2024:i:2:p:151-163

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