A Study to Measure Impact of GDP & Inflation on Credit Risk Ratios of AXIS Bank

Indian banking sector has expanded in an exponential manner in the past decade offering a wide range of services to rural, urban and metropolitan areas of the country. The banking sector reform initiated by the Reserve Bank of India has created a competitive environment for both public and private sector banks and are therefore vigorously expanding their customer base to offer various services. In light of the recent global financial crisis, risk measurement and management in the Indian banking sector is gaining importance. Credit risk is the core of all banking activities to both private and public sector banks. Our study illustrates how certain key credit risk ratios can be used to measure the credit risk in the banking sector through analysis of AXIS Bank. The current study is undertaken to analyze the various credit risk related ratios for Axis Bank and correlate those ratios with key macroeconomic indicators like inflation and GDP from 2001–2011.