Depositor discipline in Indian banking: Separating facts from folklore
Saibal Ghosh and
MPRA Paper from University Library of Munich, Germany
The paper traces the determinants of depositor discipline in Indian banking. Using data for the period 1997:1 to 2002:4, the findings reveal that, while bank-specific factors are dominant in case of state-owned banks, systemic variables tend to overwhelm bank-specific factors in explaining behaviour of depositors of private banks. In case of private and foreign banks, policy announcements have an important bearing on the dependent variable. For state-owned banks, larger asset translates into higher deposit growth, suggesting that depositors are sensitive to the ‘too-big-to-fail’ effect. Finally, insured depositors tend to exercise discipline by compelling banks to pay a higher price on deposits.
Keywords: depositor discipline; contagion effect; deposit insurance; banking; India (search for similar items in EconPapers)
JEL-codes: C23 G21 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:17427
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