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Impact of central bank's COVID-19 policy measures on banks: evidence from India

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  • Nivedita Sinha
  • Saandra Nandakumar

Abstract

India's central bank has responded decisively with a slew of development and regulatory policies to tackle the economic challenges posed by the pandemic crisis. This study aims to find the bank's response to the COVID-19 monetary policy announcements in India using an event study methodology. We compare the bank's response to policy measures during the pandemic crisis to the response during the 2008-2009 financial crisis and with crisis events during different monetary policy regimes. Furthermore, this paper examines if the heterogeneity in response depends on the bank's characteristics. The results suggest, on average, banks respond negatively to COVID-19 monetary policy interventions, with the sensitivity of bank's response to the policy announcements reducing with size and capitalisation of banks and increasing with profitability and poor financial health of banks.

Suggested Citation

  • Nivedita Sinha & Saandra Nandakumar, 2024. "Impact of central bank's COVID-19 policy measures on banks: evidence from India," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 19(1), pages 15-38.
    • Handle: RePEc:ids:ijepee:v:19:y:2024:i:1:p:15-38
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