IDEAS home Printed from https://ideas.repec.org/p/ess/wpaper/id4692.html
   My bibliography  Save this paper

Inter-connectedness of Banks and NBFCs in India: Issues and Policy Implications

Author

Listed:
  • Karunagaran A

Abstract

The recent global financial crisis (2007-09) has clearly highlighted the gravity of high financial inter-connectedness within the financial system. In the Indian context, this brief study attempts to explore the financial inter-connectedness between NBFCs (both deposit taking and non-deposit taking) with banking system. The study found that both NBFCs-D and NBFCs-ND-SI are highly dependent on the banking system for their funding, though there are regulatory limits at the individual bank’s level to lend to NBFCs. NBFCs’ exposures to banks in the form of deposits are however, very limited. The discouragement of NBFCs from raising public deposits has resulted in substitution of public deposits with borrowings from the banking system. The high dependency of NBFCs on banks as a whole makes the financial system vulnerable in a stressful situation. [RBI W P S (DEPR) : 21 / 2011]. URL:[http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/21WPN020112.pdf].

Suggested Citation

  • Karunagaran A, 2012. "Inter-connectedness of Banks and NBFCs in India: Issues and Policy Implications," Working Papers id:4692, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:4692
    Note: Institutional Papers
    as

    Download full text from publisher

    File URL: http://www.esocialsciences.org/Download/repecDownload.aspx?fname=A20121517416_20.pdf&fcategory=Articles&AId=4692&fref=repec
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jeffrey Carmichael & Michael Pomerleano, 2002. "The Development and Regulation of Non-Bank Financial Institutions," World Bank Publications - Books, The World Bank Group, number 15236.
    2. Various, 1972. "Report on New Publications," NBER Chapters, in: Innovations in Economic Research, pages 99-104, National Bureau of Economic Research, Inc.
    3. World Bank, 2003. "Turkey : Non-Bank Financial Institutions and Capital Markets Report," World Bank Publications - Reports 14882, The World Bank Group.
    4. World Bank, 2003. "Non-bank Financial Institutions and Capital Markets in Turkey," World Bank Publications - Books, The World Bank Group, number 15162.
    5. James B. Thomson, 2009. "On systemically important financial institutions and progressive systemic mitigation," Policy Discussion Papers, Federal Reserve Bank of Cleveland, issue Aug.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Coskun, Yener, 2011. "Does Power of Political Economy and Regulation Make Istanbul a Financial Center? (Ekonomi Politik ve Düzenlemenin Gücü Istanbul’u Finans Merkezi Yapabilir Mi?) [Does Power of Political Economy and ," MPRA Paper 36847, University Library of Munich, Germany.
    2. Demirag, Istemi, 2012. "Regulatory regime change in Turkish banks: Reactive or proactive?," Accounting forum, Elsevier, vol. 36(1), pages 62-80.
    3. Coskun, Yener, 2010. "Aracı Kurumların Risk Haritası (Risk Maps of Securities Firms) [Risk Maps of Securities Firms]," MPRA Paper 28368, University Library of Munich, Germany.
    4. Karen Goldstein Rossotto & Robert J. Peterson & Pietro Masci & Luis Alberto Giorgio & Valeriano F. García & Derek West & Ruben Lee & Osvaldo R. Agatiello & Andrew Hook & Kenroy Dowers & Ivan Sotomayor, 2003. "Focus on Capital: New Approaches to Developing Latin American Capital Markets," IDB Publications (Books), Inter-American Development Bank, number 2958 edited by Pietro Masci & Kenroy Dowers, February.
    5. Deborah Miori & Mihai Cucuringu, 2022. "SEC Form 13F-HR: Statistical investigation of trading imbalances and profitability analysis," Papers 2209.08825, arXiv.org.
    6. Mahir Binici & Bulent Koksal & Cuneyt Orman, 2013. "Stock Return Co-movement and Systemic Risk in the Turkish Banking System," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 13(Special I), pages 41-63.
    7. Oet, Mikhail V. & Bianco, Timothy & Gramlich, Dieter & Ong, Stephen J., 2013. "SAFE: An early warning system for systemic banking risk," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4510-4533.
    8. Peter J. Morgan, 2013. "Monetary Policy Frameworks in Asia : Experience, Lessons, and Issues," Macroeconomics Working Papers 23639, East Asian Bureau of Economic Research.
    9. Lehmann Matthias, 2013. "Die Ausgestaltung grenzüberschreitender Bankenaufsicht als ordnungspolitisches Problem / The Optimal Design of Cross-Border Banking Supervision As a Policy Problem," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 64(1), pages 327-348, January.
    10. Khaldoun M. Al-Qaisi, 2018. "Financial Leasing in the Mena Region: Analysis of the Institutional and Legal Aspects," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 8(1), pages 119-130, January.
    11. Yigit Aydede, 2008. "Aggregate consumption function and public social security: the first time-series study for a developing country, Turkey," Applied Economics, Taylor & Francis Journals, vol. 40(14), pages 1807-1826.
    12. Philip Turner, 2002. "Bond markets in emerging economies: an overview of policy issues," BIS Papers chapters, in: Bank for International Settlements (ed.), The development of bond markets in emerging economies, volume 11, pages 1-12, Bank for International Settlements.
    13. Tania Hamid & Farzana Akter & Naharin Rab, 2016. "Prediction of Financial Distress of Non-Bank Financial Institutions of Bangladesh using Altman’s Z Score Model," International Journal of Business and Management, Canadian Center of Science and Education, vol. 11(12), pages 261-261, November.
    14. H. Yigit Aydede, 2007. "Social Security, Intergenerational Transfers, and Saving: New Evidence from an Emerging Country," NFI Working Papers 2007-WP-16, Indiana State University, Scott College of Business, Networks Financial Institute, revised Jul 2007.
    15. Mikhail V. Oet, 2012. "Comment on "Liquidity Risk, Cash Flow Constraints, and Systemic Feedbacks"," NBER Chapters, in: Quantifying Systemic Risk, pages 61-71, National Bureau of Economic Research, Inc.
    16. Lilit Popoyan & Mauro Napoletano & Andrea Roventini, 2023. "Systemically important banks - emerging risk and policy responses: An agent-based investigation," LEM Papers Series 2023/30, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    17. Carlos Castro Iragorri & Stijn Ferrari, 2010. "Measuring the systemic importance of financial institutions using market information," Financial Stability Review, National Bank of Belgium, vol. 8(1), pages 127-141, June.
    18. Patro, Dilip K. & Qi, Min & Sun, Xian, 2013. "A simple indicator of systemic risk," Journal of Financial Stability, Elsevier, vol. 9(1), pages 105-116.
    19. Armanious, Amir, 2024. "Too-systemic-to-fail: Empirical comparison of systemic risk measures in the Eurozone financial system," Journal of Financial Stability, Elsevier, vol. 73(C).
    20. Masahiro Kawai & Michael Pomerleano, 2012. "Strengthening Systemic Financial Regulation," Chapters, in: Masahiro Kawai & David G. Mayes & Peter Morgan (ed.), Implications of the Global Financial Crisis for Financial Reform and Regulation in Asia, chapter 2, Edward Elgar Publishing.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ess:wpaper:id:4692. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Padma Prakash (email available below). General contact details of provider: http://www.esocialsciences.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.