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Book part
Publication date: 23 May 2023

Ramesh Chandra Das

Recalling that the introductory chapter (Chapter 1) wanted to carry out similar types of analysis for the major states in India. Thus, the present chapter tries to examine the…

Abstract

Recalling that the introductory chapter (Chapter 1) wanted to carry out similar types of analysis for the major states in India. Thus, the present chapter tries to examine the trends of a bank branch, deposit, credit, the credit–deposit ratio, sectoral shares of credit, magnitudes of banking transactions, credit concentration, etc., for the selected 15 states and Delhi as the only union territory for the period 1972–2019. The study period covers the pre-reform period from 1972 to 1992 and the post-reform period 1993–2019. The observations show that the branch, deposit and credit did not grow significantly during the post-reform period. As a result, the credit–deposit ratio did not increase significantly during the reform period. But, the magnitude of banking transactions increased in most of the states during the reform period. Regarding the sector-wise share of credit, AP, Maharashtra, UP and TN are the leading states in agricultural credit, WB, Gujarat and Maharashtra are in industrial credit and Kerala, Assam and Delhi are in the service sector. On the other hand, the study finds rising magnitudes credit concentrations of the states during the post-reform period in contrast to the declining concentration in the pre-reform period. Maharashtra is the state which holds around 25 per cent of all states’ credit throughout the entire period of 1972–2019. Hence, there are the notions of rising disparity and inequality in credit as well as incomes of the states and all India levels.

Details

Growth and Developmental Aspects of Credit Allocation: An inquiry for Leading Countries and the Indian States
Type: Book
ISBN: 978-1-80382-612-7

Keywords

Article
Publication date: 2 May 2017

Sunny Kumar Singh

This paper aims to examine the stability of the currency demand function for India with private consumption expenditure, tax–gross domestic product ratio and deposit rate as…

Abstract

Purpose

This paper aims to examine the stability of the currency demand function for India with private consumption expenditure, tax–gross domestic product ratio and deposit rate as explanatory variables for the period 1996:1 to 2014:4. Additionally, this paper also tries to detect the presence of endogenous financial innovation in the currency demand function.

Design/methodology/approach

For the theoretical foundation of the study, this paper has used a modified version of money-in-the-utility function. To examine the stability of currency demand function empirically, seasonal cointegration technique developed by HEGY (1990) and EGHL (1993) was applied. Finally, to detect the presence of endogenous financial innovation in the currency demand equation, the Gurley and Shaw (1960) hypothesis was tested by presenting the currency demand equation in a state–space form.

Findings

The empirical findings show that there is the absence of long-run cointegrationg relationship among the variables at the zero and annual frequency; however, there is evidence of a relationship among the variables at the biannual frequency. Moreover, the time-varying coefficient of deposit rate elasticity, used to test the Gurley–Shaw hypothesis, suggests that innovations in financial markets, especially improvements in the payment technology, raise the deposit-rate elasticity, beginning from 2010 onward.

Practical implications

The empirical results of the paper suggest that there would be shrinkage of currency demand in future. From the monetary policy angle, the Reserve Bank of India needs to adapt adequately to a situation of shrinking demand for currency.

Originality/value

Apart from using seasonally unadjusted data to examine currency demand function for India, this study, for the first time, and to the best of the authors’ knowledge, tries to test the evidence of financial innovation in India by testing the Gurley–Shaw hypothesis. The findings of the study will have significant implication in the planning of the issue and distribution of currency in the fast-changing economic environment.

Details

Journal of Financial Economic Policy, vol. 9 no. 02
Type: Research Article
ISSN: 1757-6385

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Article
Publication date: 17 August 2012

D.M. Nachane and M. Shahidul Islam

The global crisis, originating in the US financial sector, affected the Asian region primarily through three channels – declining trade volumes, exchange rate pressure and asset…

Abstract

Purpose

The global crisis, originating in the US financial sector, affected the Asian region primarily through three channels – declining trade volumes, exchange rate pressure and asset deflation. The purpose of this paper is to focus on how the crisis impacted the four major economies of South Asia, viz. Bangladesh, India, Pakistan and Sri Lanka and how, by a combination of swift actions on the monetary, fiscal and exchange rate fronts, the worst consequences of the crisis were averted.

Design/methodology/approach

The regulatory and supervisory systems in these four economies are then benchmarked against certain desirable norms, which have emerged out of post‐crisis international deliberations.

Findings

It is felt that the South Asian regulatory systems perform fairly well visàvis these norms.

Practical implications

The paper also touches upon the major highlights of the crisis impact, policy responses and post‐crisis recovery in the Southeast Asian region.

Originality/value

The several similarities and the few contrasts between the two regions on these aspects are also presented.

Details

South Asian Journal of Global Business Research, vol. 1 no. 2
Type: Research Article
ISSN: 2045-4457

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Article
Publication date: 5 May 2015

Santi Gopal Maji and Utpal Kumar De

– This paper aims to examine the association between regulatory capital and risk of Indian commercial banks and the impacts of other relevant variables on them.

Abstract

Purpose

This paper aims to examine the association between regulatory capital and risk of Indian commercial banks and the impacts of other relevant variables on them.

Design/methodology/approach

The study is based on a secondary data set on Indian commercial banks collected from “Capitaline Plus” corporate database and annual reports of the respective banks. Total 41 major Indian banks (21 public and 20 private sector banks) are considered in this study. Here absolute values of capital and risk are used as dependent variables along with some relevant bank specific explanatory variables in a system of a two-equation model. Based on the nature of interrelationship and identifiability of the equations, three-stage least squares (3SLS) technique is used to estimate the relationship.

Findings

Risk and capital of Indian commercial banks are inversely associated. The influence of profitability on both capital and risk is significantly positive. Moreover, human capital efficiency is negatively associated with the undertaking of risk by the banks. In this respect, Indian private sector banks are found to be more efficient in utilizing human capital for reducing credit risk.

Originality/value

It is the first comparative study in India examining the relationship between capital and risk of Indian public and private sector commercial banks covering both Basel I and II periods. Further, the role of human resource in managing risk is considered as a relevant variable in this study.

Details

Journal of Financial Economic Policy, vol. 7 no. 2
Type: Research Article
ISSN: 1757-6385

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Article
Publication date: 17 June 2024

Aakanksha Shrawan and Amlendu Dubey

The study seeks evidence on the asymmetric effects of broad money growth on inflation in the short run and long run, in the context of emerging markets and developing economies…

Abstract

Purpose

The study seeks evidence on the asymmetric effects of broad money growth on inflation in the short run and long run, in the context of emerging markets and developing economies (EMDEs).

Design/methodology/approach

Using a panel dataset of 122 EMDEs (by distinguishing between inflation-targeting and non-inflation-targeting EMDEs), we employ the nonlinear counterpart of the autoregressive distributed lag framework, which provides evidence of asymmetric dynamics between money growth and inflation in EMDEs.

Findings

In consonance with the quantity theory of money, we find a long-run relationship between money growth and inflationary outcomes. We also find that the response of inflation is higher to a tightening episode in the monetary policy stance than to a loosening episode. The study also provides evidence that adopting the inflation targeting framework in EMDEs has led to a significant reduction in the inflation rates along with ensuring a higher magnitude of transmission from money supply growth to inflationary outcomes.

Originality/value

To the best of our knowledge, the present study is one of the first attempts to evaluate the differential impact of broad money growth on inflationary outcomes, using a panel dataset of EMDEs. As a result of inherent differences in the financial structures of EMDEs vis-à-vis advanced nations, there is an imperative need to assess the dynamics of pass-through from money supply to inflation to gain an understanding of the mechanism of monetary transmission in these economies.

Details

Journal of Economic Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 11 January 2021

Manogna R.L.

Previous studies have examined the relationship between institutional investors and corporate social responsibility (CSR) engagement primarily for the case of developed nations…

Abstract

Purpose

Previous studies have examined the relationship between institutional investors and corporate social responsibility (CSR) engagement primarily for the case of developed nations. The purpose of this paper is to look at the association between different ownership categories and CSR spending of selected Indian firms within an emerging market context.

Design/methodology/approach

This study examines the motivations that guide the CSR strategies of different ownership groups. Random-effects Tobit panel regression is performed on a panel of BSE-listed non-financial Indian firms panel comprising of 5,313 firm year observations over a six-year period (2014-2019).

Findings

Heterogeneous behavior of institutional investors is revealed through the study. Different categories of institutional investors have different preferences for CSR spending of a firm. Lending institutes and foreign institutional investors (FIIs) are seen to support the CSR investments. However, mutual fund investors are seen to not influence the CSR spend by the firms. Further, the results show that family ownership, measured in terms of family shareholding, positively moderates the lending institutions and mutual funds toward CSR and does not impact the FIIs decision regarding the CSR investments.

Practical implications

The analysis has implications for both institutional investors and multinational firms. In the emerging market context, managers and owners who target long term strategies such as CSR, will benefit from increasing shareholdings of creditors (lending institutions). They can also take steps to improve their transparency and corporate governance structure so as to attract the foreign institutional investments.

Originality/value

Managers cannot ignore the heterogeneities of institutional investors in their investment decisions and hence CSR decisions need to align with those of different types of investors. This study adds to the existing literature by offering new empirical insights from the perspective of an emerging market, India.

Details

Review of International Business and Strategy, vol. 31 no. 4
Type: Research Article
ISSN: 2059-6014

Keywords

Article
Publication date: 4 February 2021

Nemiraja Jadiyappa, Anto Joseph and Garima Sisodia

The purpose of this paper is to empirically examine the impact of the bank-appointed directors on the agency costs of debt by using the idiosyncratic risk of stock returns as a…

Abstract

Purpose

The purpose of this paper is to empirically examine the impact of the bank-appointed directors on the agency costs of debt by using the idiosyncratic risk of stock returns as a measure of agency costs of debt.

Design/methodology/approach

We use multivariate panel regression, event study and finally, propensity score matching approaches to test our hypothesis. The robustness of the results is tested for possible endogeneity issues by employing instrumental variable two-stage least square (IV-2SLS) technique.

Findings

Consistent with the efficient monitoring hypothesis, we find a negative relationship between the presence of the bank-appointed director and the idiosyncratic volatility of stock returns among Indian firms. This implies that such firms take up less risky investment projects.

Originality/value

We contribute to the literature from two aspects. First, to the best of our knowledge, this is the first study that examines the monitoring efficiency of creditors' governance. Hitherto, such examinations are done from the shareholders' perspective. Second, we examine the role of the bank-appointed directors on the board of non-financial firms in an emerging world context and find, contrary to the existing evidence in the US context, active monitoring role played by such directors.

Details

International Journal of Managerial Finance, vol. 18 no. 2
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 1 December 2020

Manogna R.L. and Aswini Kumar Mishra

The preference of firm corporate social responsibility (CSR) spending is shaped by different groups of owners and the institutional environment in which the firm operates. This…

Abstract

Purpose

The preference of firm corporate social responsibility (CSR) spending is shaped by different groups of owners and the institutional environment in which the firm operates. This paper aims to study the heterogeneity among the controlling groups and firms’ internationalization in influencing the CSR decision in emerging economy firms.

Design Methodology Approach

This paper draws understanding from institutional theory to inspect the propensities of various ownership groups such as lending institutions (LI), domestic mutual funds (MF) and foreign institutional investors (FIIs). The empirical analysis was conducted from a sample of 1,594 unique Bombay stock exchange (BSE)-listed non-financial Indian firms during the 2014–2019 period using Tobit panel regression analysis.

Findings

The findings reveal that firms’ CSR activities are impacted differently by ownership share of different types of institutional investors after controlling for firm-level resources and capabilities. Lending institutions, FIIs and MF are supportive of CSR investments by firms along with international investments by the firm. Further, the results show that the CSR spend is positively influenced by the business group affiliation of the firm compared to the unaffiliated group of firms.

Practical Implications

The analysis has implications for both institutional investors and multinational firms. In the merging market context, managers and owners who target long term strategies such as CSR will benefit from increasing shareholdings of creditors (lending institutions). They can also take steps to improve their transparency and corporate governance structure so as to attract foreign institutional investments, thus, in turn, helping the internationalization process of the firm.

Originality Value

This paper considers the role of the diverseness of the ownership institutional investors along with the moderating effect of business group affiliation of the firm and international investments in impacting the CSR spend. This disparity has not been previously studied with the latest data in an emerging economy context.

Details

Journal of Asia Business Studies, vol. 15 no. 2
Type: Research Article
ISSN: 1558-7894

Keywords

Article
Publication date: 7 March 2024

Karan Raj and Devashish Sharma

The purpose of this study is to construct a new index to assess the impact of an energy price shock on macroeconomic indicators of India. This paper also shows a comparative…

Abstract

Purpose

The purpose of this study is to construct a new index to assess the impact of an energy price shock on macroeconomic indicators of India. This paper also shows a comparative analysis of the constructed index along with pre-existing World Bank and International Monetary Fund indices on energy.

Design/methodology/approach

This paper uses three vector autoregressions and compute the long-term impact of the indices on the considered macroeconomic variables through impulse response functions.

Findings

This paper finds that an energy price shock has a detrimental impact on the macroeconomic indicators of India in the long run. This study also finds that the constructed index acts as a relatively more sensitive index in comparison to the International Monetary Fund and World Bank indices, which is bespoke to a developing economy case. This sensitivity is ascribed to dynamic weighting for a different basket of energy components, which are more pertinent to an Indian context.

Originality/value

The novelty of this research lies in the construction of a new index and its comparison to the existing ones. This study justifies why a developing economy would require a different measure of energy as opposed to the existing indices.

Details

International Journal of Energy Sector Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1750-6220

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Article
Publication date: 7 June 2011

Saibal Ghosh

Employing data on 14 major Indian states during 1973‐2004, this paper aims to investigate the hypothesis that economic growth is affected by financial outreach.

Abstract

Purpose

Employing data on 14 major Indian states during 1973‐2004, this paper aims to investigate the hypothesis that economic growth is affected by financial outreach.

Design/methodology/approach

The paper employs univariate tests as well as advanced panel regression techniques to examine whether financial outreach matters for state‐level economic growth.

Findings

The analysis suggests that improvements in financial outreach led to a perceptible rise in per capita growth. In terms of magnitudes, a rise in demographic outreach by 10 percent raises state per capita growth by 0.3 percent; in case of geographic outreach, the increase is lower. Finally, the analysis supports the hypotheses that states with higher manufacturing share tend to grow faster and the quality of state‐level institutions and infrastructure exert a significant bearing on growth.

Research limitations/implications

Although the definitions of financial outreach are based on international best practice, they focus only on banks and are driven by the availability of data on relevant variables.

Practical implications

The article belongs to the broad strand of literature which examines the finance‐growth nexus.

Social implications

Financial outreach is presently an avowed objective of policymakers, both in India and elsewhere. The article examines which sets of economic/policy variables impact financial outreach. The analysis can provide policymakers with feedback as regards the feasibility of the strategies pursued to improve financial outreach and thereby, how best to redesign and fine‐tune them.

Originality/value

To the author's knowledge, this is presumably the first study in India to examine the financial outreach‐growth nexus in a systematic manner at the sub‐national level.

Details

Journal of Indian Business Research, vol. 3 no. 2
Type: Research Article
ISSN: 1755-4195

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