AN ANALYSIS OF FACTORS AFFECTING NON-PERFORMING ASSETS IN INDIAN BANKING SECTOR

Deterioration of asset quality destabilizes the financial system by adversely affecting the efficiency, profitability, solvency and liquidity of the banking sector. Both macroeconomic and bank specific factors should be analysed properly to know their strength and direction of impact on the bad assets to have effective NPA resolution mechanism. Unemployment Rate Inflation, Economic Growth, Export rate, Exchange rate, Fiscal Deficit ratio are the macroeconomic indicators and Return on Assets, Credit Deposit ratio, Net Interest Margin are the bank specific factor that are taken from 2003-04 to 2019-20 to explain the variability in Non-performing assets of Public sector and Private sector banks. Fixed effect estimation with robust clustered standard error is used for the panel data regression. Paper found that except unemployment rate all other variables have significant impact on bad assets. Bank specific factor have strong negative impact on the dependent variables. Only exchange rate affects the non-performing loans positively but other macroeconomic variables are negatively associated. KEYWORDS: Non-Performing Assets, Macroeconomic indicators, bank specific factors, Fixed effect

AN ANALYSIS OF NON PERFORMING ASSETS OF INDIAN SCHEDULED COMMERCIAL BANKS

Non-performing Asset breaks the recycling procedure of deposit and investment as it does not generate substantial income and blocks the cash flow. The motive of the paper is to conduct comparative analysis among Gross NPA, Net NPA, and Net Profit by adopting correlation, ANOVA, the average for selected bank groups which are analyzed in MS-EXCEL and SPSS. The aggregate data of 16 years from 2004-05 to 2019-20 is taken from the RBI website. Public Sector banks acquire more GNPA and NNPA and less Net Profit as compared to other two due to various reasons explained in this paper. Pearson correlation in SPSS shows that there is strongly negative and significant correlation between net profit and GNPA of public sector bank group which reflects that rising bad assets can reduce the banks’ profitability. But in case of foreign banks group, a strong but positive association between net profit and GNPA is observed. The Private bank group shows no significant association between these two variables. ANOVA test result shows there is a significant difference in the movement of GNPAs and NNPAs (in amounts) for different groups of banks during the study period. But in the case of Net profit, no significant difference was observed for these bank groups.

Application of Hybrid Approach in Banking System: An Undesirable Operational Performance Modelling

Non-performing loans (NPLs) is a critical constituent that impacts the operational performance of banks. Rising level of risk leads to poor operational performance, especially when it is beyond the bank’s capabilities to control the increasing bad assets. This calls for real-time performance assessment coupled with futuristic decision making to support banking managers. This observation motivates the authors of this article to develop a two-stage performance prediction assessment model. Accordingly, a hybrid approach combining data envelopment analysis (DEA) and artificial neural network (ANN) is developed to measure and predict the operational efficiency scores of banks. DEA effectively explores the operational performance as well as improvable areas of inefficient banks. The training of ANN model is dependent on estimated operational DEA efficiency scores with the objective to estimate the efficiency scores. Domain for the validation of this study includes dataset derived from Indian banks. The validation result shows that trained ANN model has the prediction capacity with minimum error and maximum accuracy. Finally, the outcome of this study is significantly directed towards business managers who can rely on predictions based on empirical findings of this proposed hybrid modelling.

Bold Women, Bad Assets: Honour, Property and Techno-Promiscuities

In June 2016, Qandeel Baloch, a 26-year-old Pakistani social media star, was murdered. Her death sparked both public outrage and a policy debate around ‘honour killing’, digital rights and sex-positive sexuality across Pakistan and its diasporas. Qandeel challenged what constitutes a proper Pakistani woman, an authentic Baloch and a respectable digital citizen. As a national sex symbol, she failed at the gendered workings of respectable heterosexuality, and during her short lifetime she optimised this failure and public fetish as a technologically mediated social currency (clicks, hashtags, comments, likes, reposts) to build a transnational celebrity brand. I centre Qandeel Baloch’s life and afterlives to think through the economic entanglements of honour, racialised ethnicity, coloniality, sexual violence and social media at the intersections of globalised anti-Blackness and honourable brownness as a matter of global capital. Within these complex registers of coloniality, Qandeel’s life and brutal murder necessitate a rethinking of categories of racialised ethnicity (Baloch), sexual labour (racial capital) and social media (digitality) as vectors of value for capitalism and nationalism. By centring Qandeel, I define honour as a form of racialised property relations. This rereading of honour, as an economic metric of heteropatriarchy, shifts my lens of honour killing from a crime of culture to a crime of property. Women’s honour functions as a necrocapitalist technology that constructs female and feminine bodies as the debris of heterosexual empire through racialised, gendered and sexualised property relations. These relations and registers of honour get further complicated by social media currency and discussions around digital rights, privacy and freedom of expression. Honour is, therefore, the economic management of sexual morality produced through race, religion and imperialism.

The Effect of Bank Supervision and Examination on Risk Taking: Evidence from a Natural Experiment

We exploit an exogenous reduction in bank supervision and examination to demonstrate a causal effect of supervisory oversight on financial institutions’ risk taking. The additional risk took the form of risky lending, faster asset growth, and a greater reliance on low-quality capital. This response to less oversight boosted banks’ odds of failure. Lastly, we show that the reduction in oversight capacity led to more costly failures because there were longer delays in closing insolvent institutions, and because more bad assets were passed to the government insurance fund.

Incorporating risk into technical efficiency for Vietnam’s and ASEAN banks

Purpose The purpose of this paper is to incorporate risk in technical efficiency of ASEAN banks in a panel data framework for the period 2000 to 2015. Design/methodology/approach The directional distance function and semi-parametric framework are employed to estimate efficiency scores for two scenarios, one with only good outputs and the other with a combination of good and bad outputs. Findings The findings show there is no evidence of technological progress for banks in ASEAN and concerns about the outperformance of Vietnam’s banks. In addition, performance of Vietnam’s banks tends to be distorted by low level of loan loss reserves. Practical implications To reflect the true performance and shorten the period of removing bad assets, the State Bank of Vietnam can request banks in Vietnam to book more loan loss reserves. Originality/value By examining such a new approach, this study makes an early attempt to incorporate credit risk into the banking efficiency in ASEAN region.

The Social Value of Financial Expertise

I study expertise acquisition in a model of trading under asymmetric information. I propose and implement a method to measure r, the ratio of the marginal social value to the marginal private value of expertise. This can be decomposed into three sufficient statistics: traders’ average profits, the fraction of bad assets among traded assets, and the elasticity of good assets traded with respect to capital inflows. I measure r = 0.16 for the junk bond underwriting market. Since this is less than 1, it implies that marginal investments in expertise destroy surplus. (JEL D82, G11, G14, G21, L84)

Determinants of Financial Stress of Indian Banks

The study examines factors influencing non-performing loans (NPLs) for Indian banks. The analysis contributes by including restructured advances also in addition to standard measures of asset quality that provides comprehensive picture of pressure on banks’ balance sheet. Moreover, Bayesian technique with multivariate t-distributed prior is applied for robust estimation. Utilizing quarterly dataset from 2005 to 2015, strong persistence of bad assets is clearly evident. Bank-specific characteristics such as growth of advances, profitability and net interest margin are significant determinants. Among macro-factors, high growth rate is having retarding impact on bad assets. Moreover, ownership effect is having differential behaviour with state-owned banks being most vulnerable. JEL: G21, C11, C23

A Study on the Credit Scale of Commercial Banks

In recent years, with the rapid development of China's economy and the trend of economic globalization, China's financial market development momentum is good. Commercial banks and other financial institutions, the rapid growth of credit scale, the development of the national economy has played a catalytic role. But the credit changes will affect the investment changes, which led to increased money supply, but also increase the credit risk, commercial bank credit expansion caused by a series of problems also exposed: exacerbate inflation, resulting in overcapacity, causing economic structural imbalance, accumulate the risk of the financial system, and increase the bank's bad assets. The scale of credit has become a hot topic of concern at home and abroad, research and grasp the rational growth of commercial bank credit to achieve the best size of the problem is urgent. This paper analyzes the reasons for the increasing credit scale of commercial banks, analyzes the harm of excessive expansion of credit scale, explains the necessity of rational expansion of credit scale, and puts forward some suggestions on the credit development of commercial banks in the future.

Cycles of nationalisation and privatisation, and the role of the state in Ireland

The article examines how the roles of state institutions and state owned enterprises have been changed in Ireland since its independence, with special regard to the role of state ownership and crisis management. The history of planning and social partnership, the courses of nationalisation and privatisation and the problem of damaging the state are discussed as well. The author concludes that the crisis has not resulted in the strengthening of the developmental or welfare role of the state, the evolution of a “developmental welfare state” has become less likely in Ireland in the course of crisis management. Another lesson is that the state can manage certain bad assets of the private sector in a way that yields a profit to the public. There are other costs of the crisis management, however, which are to be paid by the people and result in a decrease of state ownership and a shrinking of the welfare systems.