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Risk and Productivity Change of Public Sector Banks

Abhiman Das

Industrial Organization from University Library of Munich, Germany

Abstract: While the relationship between portfolio risk and capital and its interrelationship with operating efficiency has been explored elsewhere, limited evidence has been forthcoming on the interrelationships among capital, non-performing loans and productivity. The paper makes an attempt to examine the same in the Indian context. Using data on public sector banks (PSBs) for the period 1995-96 through 2000-2001, the paper finds capital, risk and productivity change to be intertwined, with each reinforcing and to a degree,complementing the other. The results imply that inadequately capitalised banks have lower productivity and are subject to a higher degree of regulatory pressure than adequately capitalised ones. Finally, the results lend some credence to the belief that lowering government ownership tends to improve productivity.

JEL-codes: L (search for similar items in EconPapers)
Pages: 12 pages
Date: 2004-11-01
New Economics Papers: this item is included in nep-fin
Note: Type of Document - pdf; pages: 12. Published in 'Economic and Political Weekly' February 2, 2002
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpio:0411002

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