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Elections and provisioning behavior: Assessing the Indian evidence

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  • Ghosh, Saibal

Abstract

The study investigates the impact of elections on bank provisioning. Using longitudinal data for India, the results indicate that banks reduce provisions around elections. This effect is seen primarily at state-owned and old private banks. In addition, the evolution of these provisions shows a cyclical pattern. No discernable impact of elections on provisioning is evident one year ahead of elections. The net effect of these practices is reflected in bank financials, in terms of higher funding cost and an increase in lending rates.

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  • Ghosh, Saibal, 2022. "Elections and provisioning behavior: Assessing the Indian evidence," Economic Systems, Elsevier, vol. 46(1).
    • Handle: RePEc:eee:ecosys:v:46:y:2022:i:1:s093936252200005x
    DOI: 10.1016/j.ecosys.2022.100943
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    More about this item

    Keywords

    Banking; Elections; India; Lending; Provisioning;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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