Publications
Publications
- 2008
- HBS Working Paper Series
Financial Development, Bank Ownership, and Growth. Or, Does Quantity Imply Quality?
By: Shawn A. Cole
Abstract
In 1980, India nationalized its large private banks. This induced different bank ownership patterns across different towns, allowing credible identification of the effects of bank ownership on financial development, lending rates, and the quality of intermediation, as well as employment and investment. Credit markets with nationalized banks experienced faster credit growth during a period of financial repression. Nationalization led to lower interest rates and lower quality intermediation, and may have slowed employment gains in trade and services. Development lending goals were met, but these had no impact on the real economy.
Keywords
Economic Growth; Credit; Banks and Banking; Interest Rates; State Ownership; Private Ownership; Banking Industry; India
Citation
Cole, Shawn A. "Financial Development, Bank Ownership, and Growth. Or, Does Quantity Imply Quality?" Harvard Business School Working Paper, No. 09-002, July 2008.