City Research Online

Abstract

This 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.

Publication Type:	Article
Additional Information:	NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Banking & Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Banking & Finance, Volume 34, Issue 1, January 2010, Pages 246–254, http://dx.doi.org/10.1016/j.jbankfin.2009.07.022
Publisher Keywords:	Regulation; Competition; Ownership; Efficiency
Subjects:	H Social Sciences > HF Commerce
Departments:	Bayes Business School > Finance
Related URLs:	Author
SWORD Depositor:	Symplectic Administrator

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