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Ownership, competition, and bank productivity: An analysis of Indian banking in the post-reform period

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  • Sanyal, Paroma
  • Shankar, Rashmi
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    Abstract

    This paper investigates the effect of ownership and competition on Indian bank productivity since the 1991 reforms. We find that Indian private banks dominate the public and foreign banks both in terms of productivity levels and productivity growth, with the new Indian private banks leading the charge. Competition has a positive impact on productivity for the old Indian private banks, and all the other banks are hurt by competition -- the worst hit being new Indian private banks. A similar picture emerges on the productivity growth side, with the new Indian private bank productivity growth being the worst affected as competition increases. An analysis of the pre- and post-1998 periods shows that the latter period displays a much higher productivity gap between the Indian private banks and the public and foreign banks. Indian private bank productivity and productivity growth suffer due to increasing competition in the post-1998 period.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Review of Economics & Finance.

    Volume (Year): 20 (2011)
    Issue (Month): 2 (April)
    Pages: 225-247

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    Handle: RePEc:eee:reveco:v:20:y:2011:i:2:p:225-247

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    Web page: http://www.elsevier.com/locate/inca/620165

    Related research

    Keywords: Bank productivity Bank ownership Competition;

    References

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    Cited by:
    1. Fujii, Hidemichi & Managi, Shunsuke & Matousek, Roman, 2014. "Indian bank efficiency and productivity changes with undesirable outputs: A disaggregated approach," Journal of Banking & Finance, Elsevier, vol. 38(C), pages 41-50.
    2. Hoxha, Indrit, 2013. "The market structure of the banking sector and financially dependent manufacturing sectors," International Review of Economics & Finance, Elsevier, vol. 27(C), pages 432-444.
    3. Zhang, Jianhua & Jiang, Chunxia & Qu, Baozhi & Wang, Peng, 2013. "Market concentration, risk-taking, and bank performance: Evidence from emerging economies," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 149-157.

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