Credit Risk Management Practices and Financial Performance: An Empirical Study of Banks

International Journal of Emerging Research in Science, Engineering, and Management
Vol. 2, SI1 (2026), pp. 96–102
Proceedings of Selected Papers from the
National Conference on Emerging Trends in Commerce and Management
NCETCM-2K26
2026-03-30 to 2026-03-31
Vijayawada, Andhra Pradesh, India
Organized by Andhra Loyola College, Vijayawada, India
eISSN: 3107-9075

This work is licensed under a Creative Commons Attribution 4.0 International License .

Credit Risk Management Practices and Financial Performance: An Empirical Study of Banks

1Chittimalla Bhargavi, 2M Sravanthi, 1V Rajitha

1Assistant Professor, Department of Business Management, Vaagdevi College of Engineering Autonomous, Warangal (TS), India
2Associate Professor, Department of Business Management, Vaagdevi College of Engineering Autonomous, Warangal (TS), India

Abstract

Credit risk management is a crucial determinant of financial performance in the banking sector. This study examines the impact of credit risk management practices on the financial performance of selected public and private sector banks in India using panel data for the period 2020–2024. Key credit risk indicators such as non-performing loans (NPLs), capital adequacy ratio (CAR), and loan-to-deposit ratio (LDR) are considered, while financial performance is measured using return on assets (ROA) and return on equity (ROE). The study adopts a comparative and empirical approach using descriptive statistics and trend analysis. The findings reveal that private sector banks outperform public sector banks in terms of profitability due to lower NPL levels and more efficient risk management practices. However, public sector banks have shown notable improvement in asset quality in recent years. The study emphasizes the importance of effective credit risk management in enhancing bank performance and stability. .

Keywords: Credit Risk Management, Financial Performance, Non-Performing Loans, Public and Private Sector Banks, Capital Adequacy Ratio.

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DOI: 10.66710/ijersem.v2si1.12

Open Access • Peer Reviewed Article

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This article is part of Volume 2, Special Issue 1 (May 2026)

2026-05-17