Journal de l'économie mondiale

The Economics of NPA Behaviour in the Global Economy

Abstract

Samayita B

NPA is a vexing problem which has been globally effecting economies for a long time. The mounting NPA levels in banks and financial institutions calls for earnest attention and immediate action as it is a menace to the public. Bank credit motivates economic growth of the country and any obstruction in the undisturbed flow of credit, a significant cause for which is the heightened NPA levels, is detrimental to the health of the economy. The issue of Non-performing assets (NPA), the blatant cause of the current global financial crisis, has been drawing the attention of all and sundry for its rapid manifestation in the present financial structure. The primary objective of this paper is to understand the economic and mathematical models backing the phenomenon of NPAs. In this regard we have utilised the basic Keynesian economics to study behaviour of NPAs at the macroeconomic level and hence make viable conclusions and give policy suggestions regarding the same.