A Study on impact of Credit Risk Management on Financial Performance of Commercial Banks in India
Main Article Content
Abstract
Purpose: The main purpose of this research is toexamine the impact of credit risk management on the financial performance of commercial banks in India and Two mathematical models have been designed to measure this relationship.
Design/methodology/approach: The panel data regression model is applied to analyze the data. It is analyzed with the help 0f E-views 10. The study is based on Vector Auto Regression model for panel data. In panel model equation, credit risk management indicators is considered as independent variables measured by Capital adequacy ratio (CAR), Loan to deposit ratio (LTDR), Bank size (BS) whereas banks profitability is taken as dependent variables measured by Return on assets (ROA), Return on equity (ROE).
Findings: This study found that credit risk measures as capital adequacy ratio, bank size and loan to deposit ratios are not effect the bank’s financial performance (profitability) measures by ROA &ROE and there is no short term and long term effect on between the credit risk indicators and bank’s profitability measures. The PVAR model and Wald test proves that the credit indicators are can’t significant or can’t influence the dependent variables or financial performance of the banks.
Originality/value: The article will be value for those who interested in the credit risk management in banks.