Bhaumik, S.K. orcid.org/0000-0002-4459-3659, Kutan, A. and Majumdar, S. (2018) How successful are banking sector reforms in emerging market economies? Evidence from impact of monetary policy on levels and structures of firm debt in India. European Journal of Finance, 24 (12). pp. 1047-1062. ISSN 1351-847X
Abstract
Many emerging markets have undertaken significant financial sector reforms, especially in their banking sectors, that are critical for both financial development and real economic activity. In this paper, we investigate the success of banking reforms in India where significant banking reforms were implemented during the 1990s. Using the argument that wellfunctioning credit markets would reflect a credit channel for monetary policy at work, we test whether a change in monetary policy has predictable impact on borrowing behaviour of several types of firms, including business group affiliated, unaffiliated private firms, state-owned firms and foreign firms. The empirical results suggest that unaffiliated private firms have the most vulnerable to monetary policy stance during tight policy regimes. We also find that during tight monetary policy regimes, bank credit of smaller firms is more sensitive to changes in the interest rate than that of large firms. In an easy money regime, monetary policy and the associated change in interest rate does not affect change in bank credit, change in total debt and the proportion of bank credit in total debt for any of the firms. We discuss the policy implications of the findings.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2017 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited, and is not altered, transformed, or built upon in any way |
Keywords: | Banking reforms; Monetary policy; Credit markets; Bank debt; Debt structure |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Management School (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 17 Oct 2017 13:20 |
Last Modified: | 14 Dec 2023 12:11 |
Status: | Published |
Publisher: | Taylor & Francis (Routledge) |
Refereed: | Yes |
Identification Number: | 10.1080/1351847X.2017.1391857 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:122508 |