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Determinants of nonperforming assets-bank-specific and macroeconomic factors: A panel data analysis of different group of commercial banks operating in India

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  • Biswajit PATRA

    (Indian Institute of Technology Bombay, India)

  • Puja PADHI

    (Indian Institute of Technology Bombay, India)

Abstract

This paper examines the relationship between the Net Nonperforming Assets (NNPAs) and the factors influencing them (bank specific and macroeconomic) for different group of Indian commercial banks (State Bank of India and its associates, nationalised banks, private Banks, foreign banks) in a panel data framework. From the macroeconomic variables, two principal component series have been created; one is from the group of variables having positive correlation with the NNPAs and the other from the group of variables having negative correlation, for different type of banks. The linear and the dynamic panel regressions and further Impulse Response analysis have been carried out to check the linkages between the NNPAs with its determinants. The result shows that the impact of determinants on NNPAs varies for different group of banks as the banking practices and regulations vary among themselves. Indian banks got influenced more in comparison to the foreign banks with the change in macroeconomic conditions.

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  • Biswajit PATRA & Puja PADHI, 2016. "Determinants of nonperforming assets-bank-specific and macroeconomic factors: A panel data analysis of different group of commercial banks operating in India," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(609), W), pages 215-236, Winter.
    • Handle: RePEc:agr:journl:v:xxiii:y:2016:i:4(609):p:215-236
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    5. Swati Singh & Manpreet Arora, 2023. "Examining and analysing the determinants of non-performing assets in public and private sector banks in India," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 25(4), pages 553-568.

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