BANK CREDIT AND SECTORAL GROWTH – EVIDENCE FROM INDIAN STATES

Gautam Negi () and Himanshu Mishra ()
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Gautam Negi: Lal Bahadur Shastri Institute of Management, New Delhi
Himanshu Mishra: Lal Bahadur Shastri Institute of Management, New Delhi

Review of Economic and Business Studies, 2023, issue 31, 65-84

Abstract: The study examines the growth effect of bank credit and its variation among the states of India for three sectors namely Agriculture, Industry, and Services. The gross value added (GVA) of sectors is taken as a proxy of growth with sectoral credit as the explanatory variable in addition to five control variables. The data set of 24 states for the period 2004-05 up to 2021-22 sourced from the Reserve Bank of India website is analyzed using the Generalized Method of Moments (GMM). Findings reveal growth effect of credit varies among states and is positive for the industry and services sector. The results highlight the significance of bank credit in sectoral output and add to the existing literature on the relationship between bank credit and the growth of sectors at the state level of India.

Keywords: Bank credit; Gross value added; Growth effect; Sectoral output; Generalized Method of Moments (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:aic:revebs:y:2023:j:31:negig

DOI: 10.47743/rebs-2023-1-0004

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