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
