Financial Performance of Indian Non-Banking Financial Companies: Leverage Effect

Abstract

Non-bank financial companies (NBFCs) are an additional source of banking services for consumers and businesses. They have the potential to give banks a run for their money in the financial services market. Instead of bundling together a variety of financial services like a bank might, non-bank financial companies (NBFCs) focus on serving specific niches. In addition, some NBFCs may focus on a specific industry, giving them a distinct data advantage. By segmenting the market and offering specialized services, NBFCs increase competition among financial institutions. Non-bank financial institutions are an important part of a robust financial system that helps economies recover from and avoid financial shocks. If a country's primary means of intermediation were to fail, supplementary NBFCs would still be able to convert savings into investment capital. The investigation is causal in nature and it intends to determine the impact of leverage further on financial performance of selected top 28 NBFCs of India in past ten years from 2014 to 2023. This results demonstrates that leverage is a significant and dominant element in determining the financial performance of NBFCs in India.