2019
DOI: 10.1002/pa.1937
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Abstract: The Indian banking industry has been suffering from a huge number of nonperforming loans, and the loan asset quality has been deteriorated over the years. This has led to significant capital erosion of many banks in India. The surge in corporate defaults leading to an enormous rise in nonperforming loan assets has been impairing the performance of Indian banking industry in particular and economic growth in general. Hence, it is intuitive to ask what are the determinants of poor asset quality of Indian banks. … Show more

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Cited by 7 publications
(5 citation statements)
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References 52 publications
(90 reference statements)
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“…The independent sample t ‐test is applied, and the results are in Table 14. Among the 14 hypotheses tested, we could find statistically significant evidence for the following five hypotheses. Returns of in‐sample SIM portfolios are significantly different from the returns of in‐sample sectoral indices. Returns of out‐sample SIM portfolios are significantly different from the returns of in‐sample SIM portfolios. The risk of out‐sample SIM portfolios is significantly different from the risk of out‐sample sectoral indices. Returns of in‐sample MPT portfolios are significantly different from the returns of out‐sample sectoral indices. Returns of out‐sample MPT portfolios are significantly different from the returns of in‐sample MPT portfolios. Our findings in BFS sectors are in support of the studies by Arrawatia et al (2019); pharmaceuticals (Lal, 2016); private banks, and IT (Poornima & Remesh, 2015); inter‐sector portfolios (Sen & Fattawat, 2014). Also, we could not evidence support from the studies on inter‐sector out‐sample or mimic portfolios (Kumar & Bogarappu, 2016); automobile and FMCG (Mallikharjunarao & Anithadevi, 2017).…”
Section: Resultssupporting
confidence: 90%
See 1 more Smart Citation
“…The independent sample t ‐test is applied, and the results are in Table 14. Among the 14 hypotheses tested, we could find statistically significant evidence for the following five hypotheses. Returns of in‐sample SIM portfolios are significantly different from the returns of in‐sample sectoral indices. Returns of out‐sample SIM portfolios are significantly different from the returns of in‐sample SIM portfolios. The risk of out‐sample SIM portfolios is significantly different from the risk of out‐sample sectoral indices. Returns of in‐sample MPT portfolios are significantly different from the returns of out‐sample sectoral indices. Returns of out‐sample MPT portfolios are significantly different from the returns of in‐sample MPT portfolios. Our findings in BFS sectors are in support of the studies by Arrawatia et al (2019); pharmaceuticals (Lal, 2016); private banks, and IT (Poornima & Remesh, 2015); inter‐sector portfolios (Sen & Fattawat, 2014). Also, we could not evidence support from the studies on inter‐sector out‐sample or mimic portfolios (Kumar & Bogarappu, 2016); automobile and FMCG (Mallikharjunarao & Anithadevi, 2017).…”
Section: Resultssupporting
confidence: 90%
“…The research was conducted using the monthly prices of five companies, each listed in BSE Sensex for 2016–2017. Among the sectoral studies, banks and financial services have by far been studied mainly due to their significance to the financial system, debatable asset quality, prompt corrective action by the Reserve Bank of India, and inconsistent performance between public and private sector banks (Arrawatia et al, 2019).…”
Section: Literature Reviewmentioning
confidence: 99%
“…Deterioration of bank asset quality leads to high non-performing loans that affect banks' financial performance due to reduced interest income (Abata, 2014). An increase in loan defaults by borrowers results to a rise in non-performing assets which impairs the financial performance of banks and growth of the economy in general (Arrawatia et al, 2019). Strong asset quality on the other hand significantly impacts commercial banks financial performance (Eze and Ogbulu, 2016).…”
Section: Asset Quality and Financial Performancementioning
confidence: 99%
“…Kaushal and Ghosh (2018) reported that banks do contribute to the overall economic growth in India. Arrawatia et al (2019) found that any improvement in the GDP growth rate during crisis period has impacted NPLs positively. Kosmidou (2008) found that GDP growth plays a significantly positive role in determining banks' performance.…”
Section: External Determinantsmentioning
confidence: 98%