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Foreign banks in India: liabilities or assets?

  • Ghosh, Saibal

Using data on Indian banks for 1996-2007, the article examines the impact of foreign banks on the domestic banking sector. The analysis suggests that foreign bank penetration improves profitability and asset quality, although it dampens spreads. The results are robust to alternate measures of foreign bank presence. In addition, foreign banks appear to impact the maturity of credit portfolio of domestic banks. Finally, the results also support the fact that foreign banks typically charge lower interest rates as compared to domestic banks.

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File URL: http://mpra.ub.uni-muenchen.de/39802/1/MPRA_paper_39802.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 39802.

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Date of creation: Jun 2012
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Publication status: Published in Economic Papers 2.31(2012): pp. 225-243
Handle: RePEc:pra:mprapa:39802
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  15. Williams, Barry, 2003. "Domestic and international determinants of bank profits: Foreign banks in Australia," Journal of Banking & Finance, Elsevier, vol. 27(6), pages 1185-1210, June.
  16. De Haas, Ralph & Naaborg, Ilko, 2006. "Foreign banks in transition countries. To whom do they lend and how are they financed?," MPRA Paper 6320, University Library of Munich, Germany.
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