Work

Financial Development, Bank Ownership, and Growth: Or, Does Quantity Imply Quality?

Year: 2009

Type: article

Abstract: In 1980, India nationalized its large private banks. This induced different bank ownership patterns across different towns, allowing credible identification of the effects of bank ownership on financial development, lending rates, and the quality of intermediation, as well as employment and investment. Credit markets with nationalized banks experienced faster credit growth during a period of financial repression. Nationalization led to lower interest rates and lower-quality intermediation, and may have slowed employment gains in trade and services. Development lending goals were met, but these had no impact on the real economy.

Source: The Review of Economics and Statistics

DOI: 10.1162/rest.91.1.33

Author: Shawn Cole

Institution: Harvard University

Language: English

Topic: Banking stability, regulation, efficiency

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

Funder: National Science Foundation