A Review of Impact of High Debt on the Profitability of the Banks

Abstract

This study has an aim to analyze how the high debt effect the profitability of banks. If the bank is not capable of receiving back the amount of debt which it is given to the person then how bad debts amount will affect the profitability of bank. In this review paper seventeen papers related to impact of high debt on profitability of banks are review carefully. Different papers show the different results but if we explain the summary of results; when the credit management will be inefficient then the amount of bad debts portfolio will be higher which causes dilution in profitability.

Keywords: High debt, Profitability, Return of Assets, Return on Equity and Credit Management