Indian Journal of Finance

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A Study of Determinants and Their Impact on Bank Debt Restructuring in Indian Banks


Affiliations
1 Research Scholar, Amity Business School, Amity University Uttar Pradesh, Lucknow Campus, Malhaur, Lucknow - 226 010, Uttar Pradesh, India
2 Assistant Professor, Amity Business School, Amity University Uttar Pradesh, Lucknow Campus, Malhaur, Lucknow - 226 010, Uttar Pradesh, India

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This research investigated the determinants and their impact on the bank debt restructuring in Indian banks, especially public sector banks, from 2008 – 2018. It analyzed the impact of gross advances and gross non-performing assets (NPAs) on the total number of restructured debts of the sampled banks. Panel data regression modeling was applied, where the Fixed Effect Model (FEM) was used as an estimation method. Granger causality test and Pearson correlation analysis were also employed. The results confirmed that gross NPAs and gross advances were highly statistically significant and positively impacted the total number of restructured loans at 5% and 1% significance levels, respectively. It was also confirmed that all the years jointly and each year individually had a significant time-fixed effect on the total number of restructured debts.

Keywords

Bank Debt, Bank Debt Restructuring, Corporate Debt Restructuring, Determinants, Fixed Effect Model, Hausman Test, Indian Public Sector Banks, Non-Performing Assets, Panel Data Modeling, Restructuring.

JEL Classification : B23, B26, C01, C22, C58, E22.

Paper Submission Date : February 20, 2020 ; Paper Sent Back for Revision : October 8, 2020 ; Paper Acceptance Date : April 15, 2021 ; Paper Published Online : September 25, 2021.

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  • A Study of Determinants and Their Impact on Bank Debt Restructuring in Indian Banks

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Authors

Tabassum
Research Scholar, Amity Business School, Amity University Uttar Pradesh, Lucknow Campus, Malhaur, Lucknow - 226 010, Uttar Pradesh, India
Sarveshwar Pande
Assistant Professor, Amity Business School, Amity University Uttar Pradesh, Lucknow Campus, Malhaur, Lucknow - 226 010, Uttar Pradesh, India

Abstract


This research investigated the determinants and their impact on the bank debt restructuring in Indian banks, especially public sector banks, from 2008 – 2018. It analyzed the impact of gross advances and gross non-performing assets (NPAs) on the total number of restructured debts of the sampled banks. Panel data regression modeling was applied, where the Fixed Effect Model (FEM) was used as an estimation method. Granger causality test and Pearson correlation analysis were also employed. The results confirmed that gross NPAs and gross advances were highly statistically significant and positively impacted the total number of restructured loans at 5% and 1% significance levels, respectively. It was also confirmed that all the years jointly and each year individually had a significant time-fixed effect on the total number of restructured debts.

Keywords


Bank Debt, Bank Debt Restructuring, Corporate Debt Restructuring, Determinants, Fixed Effect Model, Hausman Test, Indian Public Sector Banks, Non-Performing Assets, Panel Data Modeling, Restructuring.

JEL Classification : B23, B26, C01, C22, C58, E22.

Paper Submission Date : February 20, 2020 ; Paper Sent Back for Revision : October 8, 2020 ; Paper Acceptance Date : April 15, 2021 ; Paper Published Online : September 25, 2021.




DOI: https://doi.org/10.17010/ijf%2F2021%2Fv15i9%2F166318