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Is State Ownership in the Indian Banking Sector Desirable?

Author

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  • Acharya, Viral

Abstract

A large part of the Indian banking system is still state-owned, at the same time when there are several private banks as well as nonbank financial institutions. This article provides evidence that the state ownership—by implicitly conferring stronger guarantees on state-owned banks—distorts the level playing field between various banking sector players. It then relates this lack of level playing field to the role played by government-sponsored enterprises (GSEs)—Fannie Mae and Freddie Mac—in the recent housing boom and bust in the United States. It therefore proposes a graceful exit of the state from the Indian banking sector.

Suggested Citation

  • Acharya, Viral, 2012. "Is State Ownership in the Indian Banking Sector Desirable?," India Policy Forum, National Council of Applied Economic Research, vol. 8(1), pages 1-35.
    • Handle: RePEc:nca:ncaerj:v:8:y:2012:i:2012-1:p:1-35
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    File URL: https://www.ncaer.org/publication/india-policy-forum-2011-12
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    Cited by:

    1. Saibal Ghosh, 2023. "Political connections and bank behaviour," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 52(1), February.
    2. Ghosh, Saibal, 2022. "Religiosity and bank performance: How strong is the link?," Journal of Behavioral and Experimental Finance, Elsevier, vol. 33(C).

    More about this item

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G2 - Financial Economics - - Financial Institutions and Services
    • D6 - Microeconomics - - Welfare Economics
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law

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