Prediction of Bankruptcy and Impact of Credit Risk Management on Profitability of Commercial Banks in India: A Study

Abstract

Banking system of a country plays a leading role in its economic development. India is also not isolate from such fact. Indian banking system plays a crucial and impactful role in both Individual and economy progress. Since the huge major flow of money into economy is controlled by banking system in India, the system policies, operational efficiencies are having linear impact on the economic development of the country. The efficiency of the banking industry of the country is the sign of economic development and public commercial banks will have to face the competition of private commercial banks as well. Hence, the present study objective is to predict the solvency condition of Indian public commercial banks and the impact of credit risk management on the profitability of commercial banks in India. To fulfil the objectives of the study, the study has been used the secondary data extracted from annual reports of the top three public commercial banks for the period from 2012 to 2022. The data were analysed using a descriptive statistics and panel data regression model and the bankruptcy is predicted using Altman’s Z Score model. the results found that, public sector Indian commercial banks under the pressure to experience the bankruptcy and there is no significant impact of credit risk management on profitability of commercial banks in India.