Does Bank Competition Necessarily Contribute to Higher Profits? The Case of Indian Banking

Bijoy Rakshit ()
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Bijoy Rakshit: School of Liberal Studies, Pandit Deendyal Energy University, India

Asian Economics Letters, 2022, vol. 3, issue 3, 1-7

Abstract: This paper empirically examines an important research question of whether changes in bank competition have influenced the profitability pattern of Indian banking. Using the two-step system generalized method of moments, we examine the implications of bank deregulation measures on bank profitability for a set of 70 commercial banks in India over the period 1997 to 2017. The findings show that a higher degree of bank competition that has led to the contraction of the interest rates margin has negatively affected bank profitability. The findings also suggest important policy implications for the Indian banking industry.

Keywords: Bank competition; profitability; System-GMM (search for similar items in EconPapers)
JEL-codes: F30 G21 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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