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Non-performing loans (NPLs) and non-performance: evidence from South Asian banks

Author

Listed:
  • Probir Kumar Bhowmik

    (University of Barishal)

  • Niluthpaul Sarker

    (Jagannath University)

Abstract

This paper examines the consequences of banks’ performance on bank risk. The paper forms a theoretical model and delivers empirical evidence to identify that banks suffer in performance as the loans become bad. Using panel data from a sample of five (05) South-Asian emerging economies from 2011 to 2019, we have found that the banks are highly influenced by the development of non-performing loans (NPLs). We have primarily used Return on Asset (ROA) followed by Return on Equity (ROE) as a substitution to the performance of the banks and NPL as the proxy of bank risk. Simultaneous regression applying 3sls finds that Non-Performing Loan (NPL) hinders banks' growth, negatively affecting their profitability. Key Words:Profitability, Banking, Non-performing Loans, FGLS, 3SLS

Suggested Citation

  • Probir Kumar Bhowmik & Niluthpaul Sarker, 2024. "Non-performing loans (NPLs) and non-performance: evidence from South Asian banks," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 13(2), pages 197-206, March.
    • Handle: RePEc:rbs:ijbrss:v:13:y:2024:i:2:p:197-206
    DOI: 10.20525/ijrbs.v13i2.3235
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