| ID | 130915 |
| Title Proper | Financial intermediation and growth |
| Other Title Information | bank-based versus market-based systems |
| Language | ENG |
| Author | Sahoo, Satyananda |
| Publication | 2014. |
| Summary / Abstract (Note) | The article empirically evaluates the role of financial intermediation in India's economic development. An assessment of various indicators of financial development reveals that both the bank-based and market-based intermediation processes have undergone remarkable improvements in the last six decades. While credit disbursement by Indian banks has increased sharply in the past decades, it is still below the world average level and even below the level of its emerging market and developing economies (EDEs) peers. However, in recent years, the market capitalisation of the Indian stock market has increased indicating greater reliance on market-based sources of funding. One-way Granger causality from private sector credit to real GDP confirms the supply-leading process of bank intermediation, while no causality was found between stock market capitalisation and real GDP. The ARDL co-integration test suggests that both the bank-based and market-based financial deepening have positive roles in driving India's economic development, while the former has a stronger role in driving India's economic growth. The findings indicate that in a relatively bank-centric financial sector, Indian banks have the potential of further channelisation of credit to productive sectors of the economy. |
| `In' analytical Note | Margin Vol.8, No.2; May 2014: p.93-114 |
| Journal Source | Margin Vol.8, No.2; May 2014: p.93-114 |
| Key Words | Emerging Market and Developing Economies - EDEs ; Financial Development ; Economic Development ; Growth and Development ; Financial Intermediation ; Banking System ; Intermediation Processes ; Market Capitalisation ; Emerging Economy ; Economic Growth ; India ; Indian Economy ; Government Policies ; Bank-Centric Financial Sector - BCFS ; Indian Banks ; Banking Policy ; Monetary Policy ; Financial Policy ; Fiscal Policy |