Unravelling the drivers of priority sector lending for inclusive economic growth: Evidence from India

Leema Roseline Arul Doss (), Gayathri Jayapal (), Justin Nelson Michael (), Zakiya Begum Sayed () and Manivannan Babu ()

International Journal of Applied Economics, Finance and Accounting, 2024, vol. 18, issue 2, 282-290

Abstract: This research aims to explore the factors influencing Priority Sector Lending (PSL) in India, with a specific focus on both bank-specific and macroeconomic variables. By delving into the determinants shaping the implementation of PSL, the study seeks to understand why PSL levels have fallen below mandated targets in recent years. The study examines PSL data from 18 institutions spanning the years 2007 to 2020. The study looks at connection between factors specific to banks, macroeconomic variables, and the distribution of credit to support priority sectors using a random effects model that takes into account the different types of variables. The analysis reveals a noteworthy positive correlation between deposits and PSL. However, the study finds insignificance in the relationship between bank-specific variables and PSL. These findings shed light on the complexities surrounding meeting PSL targets, underscoring the necessity for comprehensive policy interventions, capacity-building initiatives, and improved stakeholder coordination to bolster the effectiveness of PSL. Understanding the challenges and opportunities associated with achieving PSL targets is crucial. The research underscores the need for proactive policy measures, efforts to enhance institutional capacities, and better coordination among stakeholders. Implementing these measures could significantly augment the efficacy of PSL and foster inclusive growth by ensuring financial access to underserved segments of society in India.

Keywords: Bank-specific variables; Inclusive economic growth; Macro-economic variables; Priority sector lending; Random effects model. (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://onlineacademicpress.com/index.php/IJAEFA/article/view/1388/878 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oap:ijaefa:v:18:y:2024:i:2:p:282-290:id:1388

Access Statistics for this article

More articles in International Journal of Applied Economics, Finance and Accounting from Online Academic Press
Bibliographic data for series maintained by Heather Rothman ().