EFFECTS OF INSTITUTIONAL FACTORS ON NON-PERFORMING LOANS IN STATE BANKS OF SRI LANKA

Abstract

Non-Performing Loans (NPL) is a significant phenomenon especially in the State Banks of Sri Lanka. This is a typical feature in the majority of the banks in Asian countries. NPL arise based on several reasons. Among them, this study examinesthe significance of the institutional factors on Non-Performing loans. The population comprised of loan borrowers from State banks in Sri Lanka. Sample comprised 102 loan borrowers selected through random sampling from selected state banks in Western Province that borrowed loans during 2013-2018.. Data was collected through a questionnaire based on 08 variables identified through literature review and analyzed using independentsample t tests. Results show except management efficiency all other variables influenced on NPL. Policies should formulate to mitigate the effects of influential variables