Altman Z-Score Model Effects of Non-Performing Assets (NPAs) in Public and Private Bank In India

Abstract

The study aims to measure the effectiveness of Altman's Z-score model using Non-Performing Assets (NPA) as a level fixture index. Paper examines if Altman's Z-score model captures the decline in the financial health of the banks caused by the NPAs. The sample size is taken in selected two public (CBI & PNB) & two private sector banks (ICICI & HDFC). The study is based on secondary data & data will be collected for the last five years 2014 to 2018. The findings of this paper suggest that, due to the uniqueness of the Indian banking sector during the NPA crisis, the 'Emerging Market Model' does not produce any significantly better results. Therefore, there is a future scope to develop a tailor-made model suitable to the Indian Banking sector.