Statistical Analysis of the Relation Between the Developmental Status of Nations and Their Banks’ Npa Using Hypothesis Testing

Abstract

HDI is the most common index which is used in measuring the development of a nation. Life expectancy, literacy rate and per capita income are the main components of Human Development Index (HDI). Health, standard of living and education are the main aspects it covers. The subsequent topic this paper covers is Non-performing Assets (NPA) or Bad Loans. These NPAs are caused due to an improper structure of lending and a lack of application of suitable technology in the process. The loan taking capability of the masses is influenced by another factor called Economic Inequality, which is the difference between individuals or populations in terms of income, wealth and assets. We will observe the effect of health, education and standard of living of a country on NPAs of Banks of that country which in turn affects the interest rates levied on loans, thereby swaying the loan taking capacity of the people. In our research we analyse the NPAs of top 2 banks of 15 developing nations and 14 developed nations and formulate a Statistical Model to determine its relation with their respective HDI. We make use of T-Test and a statistical approach to develop the model and come up with a suitable conclusion.

Keywords: Non-Performing Assets (NPA), Developing Nations, Developed Nations, T-Test, Human Development Index (HDI)

JEL Classification: C12, E10, G21, O11