Banks competition, managerial efficiency and the interest rate pass-through in India

Jugnu Ansari () and Ashima Goyal

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: If banks solve an inter-temporal problem under adverse selection and moral hazard, then bank specific factors, regulatory and supervisory features, market structure, and macroeconomic factors affect banks loan interest rates and their spread over deposit interest rates. To examine post financial-reform interest rate pass through for Indian banks after controlling for all these factors, we estimate the determinants of commercial banks loan pricing decisions, using dynamic panel methods. The several factors commercial banks consider, apart from the policy rate, limit policy pass through. More competition reduces policy pass-through but it can improve monetary transmission provided it improves managerial efficiency.

Keywords: Banks; panel data; interest rates; net interest income; operating cost (search for similar items in EconPapers)
JEL-codes: C23 E43 G20 G21 L10 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2014-01
New Economics Papers: this item is included in nep-ban, nep-com, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Chapter: Bank Competition, Managerial Efficiency and the Interest Rate Pass-Through in India (2014)
Working Paper: Banks Competition, Managerial Efficiency and the Interest Rate Pass-through in India (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ind:igiwpp:2014-007

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