A Comparison of Credit Risk Management in Private and Public Banks in India

Global Journal of Business Research, v. 10 (1) p. 95-108, 2016

14 Pages Posted: 28 Jan 2016

Date Written: 2016

Abstract

Like other corporations, banks want to create value and seek ways to control risk while aiming to enhance productivity and performance. This is achieved by granting credits to customers from the money deposited by the depositor, thus placing them at risk in the case of defaulting. Despite this risk, banks must continually issue credit since it is the key source of its profitability. This research study assesses the impact of credit risk management on Indian public and private banks during the 2009-2012 period. Using pooled OLS, fixed effects and random effects, the study examines credit risk management in seven private banks and seven public banks. The results show that private banks are more capitalized and more profitable than public banks. In addition, in both cases asset quality measured using non-performing assets with negative coefficients significantly influenced bank profitability. The study extrapolates the importance of regulatory capital and the importance of risk management in ensuring stability in the financial industry.

Keywords: Capital Adequacy, Non-Performing Assets, Performance, Net Interest Margin

JEL Classification: G02, G18

Suggested Citation

Oino, Isaiah, A Comparison of Credit Risk Management in Private and Public Banks in India (2016). Global Journal of Business Research, v. 10 (1) p. 95-108, 2016, Available at SSRN: https://ssrn.com/abstract=2669688

Isaiah Oino (Contact Author)

University of East London ( email )

Longbridge Road
Dagenham, Essex, RM8 2AS
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
339
Abstract Views
1,155
rank
123,898
PlumX Metrics