India's Banks : Lending to Productive Firms? /

Capital misallocation is widely thought to be an important factor underpinning productivity and income gaps between advanced and emerging economies. This paper studies how well Indian banks allocate capital across firms with varying levels of productivity. The analysis reveals that the link between...

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Bibliographic Details
Main Author: George, Siddharth
Other Authors: Kirti, Divya, Martinez Peria, Soledad, Vijayaraghavan, Rajesh
Format: Journal
Language:English
Published: Washington, D.C. : International Monetary Fund, 2022.
Series:IMF Working Papers; Working Paper ; No. 2022/073
Subjects:
Online Access:Full text available on IMF
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520 3 |a Capital misallocation is widely thought to be an important factor underpinning productivity and income gaps between advanced and emerging economies. This paper studies how well Indian banks allocate capital across firms with varying levels of productivity. The analysis reveals that the link between productivity and bank credit growth is weaker for firms with significant ties to public sector banks, especially in years when public sector banks represent a large share of new credit. Large flows of credit to unproductive firms represent important missed growth opportunities for more productive firms. These results suggest that measures to improve governance of public sector banks, potentially including privatization, would help reduce capital misallocation. 
538 |a Mode of access: Internet 
650 7 |a Banks  |2 imf 
650 7 |a Depository Institutions  |2 imf 
650 7 |a Financial Markets and the Macroeconomy  |2 imf 
650 7 |a Micro Finance Institutions  |2 imf 
650 7 |a Mortgages  |2 imf 
700 1 |a Kirti, Divya. 
700 1 |a Martinez Peria, Soledad. 
700 1 |a Vijayaraghavan, Rajesh. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2022/073 
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