Abstract
This study examines how several economic and operational factors might forecast Non-Performing Assets (NPAs) in the banking sector. We proposed that macroeconomic indicators, interest rate changes, GDP growth rates, credit risk management strategies, loan monitoring efficiency, and industry-specific declines substantially impacted the occurrence and extent of Non-Performing Assets (NPAs). We used a one-sample t-test to determine the statistical significance of each item by comparing them to a neutral midpoint value obtained from survey responses. Our study found a strong negative correlation between macroeconomic indicators, interest rate changes, GDP growth rates, and NPAs, leading to the rejection of the null hypotheses related to these issues. We could not find statistically significant evidence indicating that credit risk management, loan monitoring, and industry-specific downturns may forecast NPAs. Therefore, we retained the null hypothesis for each of these factors. The results highlight the significant impact of macroeconomic conditions on NPAs and indicate a need to reassess risk management practices in financial institutions.
Keywords: Credit Risk Management, GDP Growth, Interest Rate Fluctuations, Loan Monitoring, Macroeconomic Indicators, Non-Performing Assets.