Indian Journal of Industrial Relations: Economics & Social Dev.

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Modern Banking:Some Differing Perspectives & the Issue of NPA


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1 Department of Economics, Panjab University, Chandigarh 160014, India
     

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The present paper argues that if banks and central banks are sensitive to growth prospects that create both good assets (for banks) and better macro fundamentals (for the central bank), NPAs as a percentage of advances would be low. The argument rests on an endogenous money thesis that supports higher growth of advances that in turn permits expansions, expansion-led learning by doing and further investment opportunities that are more productive. Rate of interest policy that best attends to this growth prospects and bank advances nexus best manages monetary prospects, including, of course, NPAs issues.
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  • Modern Banking:Some Differing Perspectives & the Issue of NPA

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Authors

Satya Prasad Padhi
Department of Economics, Panjab University, Chandigarh 160014, India

Abstract


The present paper argues that if banks and central banks are sensitive to growth prospects that create both good assets (for banks) and better macro fundamentals (for the central bank), NPAs as a percentage of advances would be low. The argument rests on an endogenous money thesis that supports higher growth of advances that in turn permits expansions, expansion-led learning by doing and further investment opportunities that are more productive. Rate of interest policy that best attends to this growth prospects and bank advances nexus best manages monetary prospects, including, of course, NPAs issues.

References