Creditor Rights, State-Owned Banks, and Investment Efficiency: Evidence from SARFAESI Act

Vishal Vaibhav

IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: I examine whether firms borrowing exclusively from government-owned banks respond differently to SARFAESI Act and how it affects the investment efficiency. I find that firms borrowing exclusively from government-owned banks experience a significant increase in investment inefficiency following the reform. I also find the increase in inefficiency is concentrated among firms with high levels of tangible assets, suggesting that collateral enforcement is the primary mechanism driving the results

Date: 2025-05-01
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