Financial Sector and Economic Growth in India /

India's financial sector has faced many challenges in recent decades, with a large, negative, and persistent credit to GDP gap since 2012. We examine how cyclical financial conditions affect GDP growth using a growth-at-risk (GaR) approach and analyze the link between bank balance sheets, credi...

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Bibliografiske detaljer
Hovedforfatter: MacDonald, Margaux
Andre forfattere: Xu, TengTeng
Format: Tidsskrift
Sprog:English
Udgivet: Washington, D.C. : International Monetary Fund, 2022.
Serier:IMF Working Papers; Working Paper ; No. 2022/137
Fag:
Online adgang:Full text available on IMF
Beskrivelse
Summary:India's financial sector has faced many challenges in recent decades, with a large, negative, and persistent credit to GDP gap since 2012. We examine how cyclical financial conditions affect GDP growth using a growth-at-risk (GaR) approach and analyze the link between bank balance sheets, credit growth, and long-term growth using bank-level panel regressions for both public and private banks. We find that on a cyclical basis, a negative shock to credit or a rise in macro vulnerability all shift the distribution of growth to the left, with lower expected growth and higher negative tail risks; over the long term, the results indicate that higher credit growth, arising from better capitalized banks with lower NPLs, is associated with higher GDP growth.
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Fysisk beskrivelse:1 online resource (30 pages)
Format:Mode of access: Internet
ISSN:1018-5941
Adgang:Electronic access restricted to authorized BRAC University faculty, staff and students