Does lending behaviour of banks in emerging economies vary by ownership? Evidence from the Indian banking sector

Sumon Bhaumik and Jenifer Piesse

CEDI Discussion Paper Series from Centre for Economic Development and Institutions(CEDI), Brunel University

Abstract: While much has been discussed about the relationship between ownership and financial performance of banks in emerging markets, literature about cross-ownership differences in credit market behaviour of banks in emerging economies is sparse. Using bank-level data from India, and a portfolio-choice model, for nine years (1995-96 to 2003-04), we examine banks’ behaviour in the context of emerging credit markets. Our results indicate that, in India, the data for the domestic banks fit well the aforementioned portfolio-choice model, especially for private banks, but the model cannot explain the behaviour of foreign banks. In general, allocation of assets between risk-free government securities and risky credit is affected by past allocation patterns, stock exchange listing (for private banks), risk averseness of banks, regulations regarding treatment of NPA, and ability of banks to recover doubtful credit. It is also evident that banks deal with changing levels of systematic risk by altering the ratio of securitized to non-securitized credit. These results have implications for disbursal of credit to small and medium enterprises in India.

Pages: 35 pages
Date: 2006-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.brunel.ac.uk/__data/assets/pdf_file/0010/342658/CEDI_06-01.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.brunel.ac.uk/__data/assets/pdf_file/0010/342658/CEDI_06-01.pdf [301 Moved Permanently]--> https://www.brunel.ac.uk/__data/assets/pdf_file/0010/342658/CEDI_06-01.pdf)

Related works:
Journal Article: Does lending behaviour of banks in emerging economies vary by ownership? Evidence from the Indian banking sector (2008)
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:edb:cedidp:06-01

Access Statistics for this paper

More papers in CEDI Discussion Paper Series from Centre for Economic Development and Institutions(CEDI), Brunel University CEDI, Brunel University,West London,UB8 3PH,United Kingdom. Contact information at EDIRC.
Bibliographic data for series maintained by Sarmistha Pal ( this e-mail address is bad, please contact ).