The impact of regulatory reforms on cost structure, ownership and competition in Indian banking

Abstract

This is the accepted version of the paper.This version of the publication may differ from the final published version. Permanent repository link AbstractThis paper evaluates the impact of financial sector reforms on the cost structure characteristics and on the ownership-cost efficiency relationship in Indian banking. It also examines the impact of reforms on the dynamics of competition in the lending market. We find evidence that deregulation improves banks performance and fosters competition in the lending market. Results suggest technological progress, once Indian commercial banks have adjusted to the new regulatory environment. This, however, does not translate in efficiency gains. There is also evidence of an ownership effect on the level and pattern of efficiency change. Finally, competition keeps building pace even in the re-regulation period and technological improvements are not hampered by the tightening of prudential norms.

Market concentration, risk-taking, and bank performance: Evidence from emerging economies

“…In the post-liberalization period, empirical research suggests that banking deregulation has led to performance improvement for state banks (Zhao et al, 2010) and state banks outperform private banks regardless of efficiency measures employed (Sensarma, 2005;Das and Ghosh, 2009;Sathye, 2003). A more recent study (Sanyal and Shankar, 2011) shows that private banks outperform both public banks and foreign banks.…”

Integration and efficiency convergence in EU banking markets

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Efficiency dynamics in Indian banking: A conditional directional distance approach

“…after the second half of 2000s). Most of the relative literature includes the period of 1990s and early 2000s (Bhattacharyya & Pal, 2013;Bhaumik & Dimova, 2004;Casu, Ferrari, & Zhao, 2013;Das & Ghosh, 2006;Das, Nag, & Ray, 2005;Kumbhakar & Sarkar, 2003;Ray & Das, 2010;Sahoo & Tone, 2009;Sanyal & Shankar, 2011;Shanmugam & Das, 2004;Tabak & Tecles, 2010;Zhao, Casu, & Ferrari, 2010). Eichengreen and Gupta (2013) and Fujii, Managi, and Matousek (2014) focus on the recent developments in the Indian banking sector.…”