Trends, Growth, and Determinants of Non-Performing Assets: A Comparative Study of Public and Private Sector Banks in Karnataka
Keywords:
Non-Performing Assets, Banking Sector Comparison, Karnataka Economy, Credit Risk Management, Public Sector Banks, Private Sector Banks, Panel Data Analysis, Financial Stability.Abstract
This comprehensive study examines the comparative dynamics of Non-Performing Assets (NPAs) in public and private sector banks operating in Karnataka from 2013 to 2023. Employing a mixed-methods approach with panel data from five public sector banks (State Bank of India, Canara Bank, Bank of Baroda, Punjab National Bank, Union Bank of India) and five private sector banks (HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, IDFC First Bank), this research analyzes temporal trends, growth patterns, and key determinants of NPAs. The study integrates macroeconomic indicators specific to Karnataka's economy with bank-specific variables to develop a holistic understanding of NPA formation. Results indicate significant disparities in NPA trends between the two banking sectors, with public sector banks demonstrating higher vulnerability to both macroeconomic shocks and internal governance issues. The research employs advanced econometric models including Fixed Effects, Random Effects, and Generalized Method of Moments (GMM) to address endogeneity concerns. Findings reveal that while both sectors respond to similar macroeconomic forces, the magnitude and persistence of these effects differ substantially. The study contributes to the literature by providing region-specific insights and offers targeted policy recommendations for NPA management tailored to Karnataka's unique economic landscape.
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