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Bank Capital, Bank Liquidity and Credit Growth: Evidence from India.

Authors :
Misra, Sangeeta D.
Source :
IUP Journal of Applied Finance; Apr2019, Vol. 25 Issue 2, p25-44, 20p
Publication Year :
2019

Abstract

This study aims at assessing the impact of bank capital, bank liquidity and interaction of bank capital and bank liquidity on the credit growth of Indian banks. The sample of the study includes 26 Indian public sector banks, 19 Indian private sector banks and 25 foreign banks incorporated in India. The time frame chosen for the study is from 2004-05 to 2015-16. The dynamic panel Generalized Method of Moments (GMM) system suggested by Blundell and Bond (1998) has been used to assess the impact of banks' capital and banks' liquidity on their credit growth. The results of the study indicate that after controlling for other bank-specific variables and after also controlling for macroeconomic variables, both bank capital and bank liquidity have a positive and significant impact on credit growth. The analysis of the impact of interaction of bank capital and bank liquidity on credit growth indicates that the effect of bank capital on credit growth is higher for banks which are less liquid than for banks which have high liquidity. The results further show that the impact of both bank capital and bank liquidity is higher for public sector banks than for private sector and foreign banks. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
09725105
Volume :
25
Issue :
2
Database :
Complementary Index
Journal :
IUP Journal of Applied Finance
Publication Type :
Academic Journal
Accession number :
136530695