The Real Effects of Bank Branching: Evidence from India

Chakraborty, I and Javadekar, A and Ramcharan, R (2021) The Real Effects of Bank Branching: Evidence from India. Working Paper. SSRN.

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Abstract

We study the impact of regulations expanding bank branching in India. We find that public sector banks (PSBs) reduce their lending to poorly performing firms when branching expands in a district. Non-performing loans at PSBs also increase when branching expands. Also, inefficient firms that depend on PSBs deleverage and are more likely to exit after branching expands in a district. At the plant level, exposure to branching is associated with an expansion in size and employment. These results suggest that greater credit market competition can lead to more efficient lending and increased economic activity in economies with protected credit markets.

Affiliation: Indian School of Business
ISB Creiators:
ISB Creators
ORCiD
Javadekar, A
UNSPECIFIED
Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Capital Misallocation, Bank Branching, Competition, India
Subjects: Financial Management
Finance
Depositing User: Gurusrinivasan K
Date Deposited: 12 May 2021 01:42
Last Modified: 12 May 2021 01:42
URI: https://eprints.exchange.isb.edu/id/eprint/1482
Publisher URL: https://dx.doi.org/10.2139/ssrn.3805031
Publisher OA policy: https://dx.doi.org/10.2139/ssrn.3805031
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