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Is there excess capacity in rural banking markets: Some empirical insights for India

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  • Das, Abhiman
  • Ghosh, Saibal

Abstract

According to economic theory, there are at least three indicators of excess capacity in banking: (a) low loan-to-asset ratio, (b) low profitability and (c) high per unit operating expense. If excess capacity exists, it will be easiest to identify, through these indicators, at regional rural banks. Using bank level data on regional rural banks in India for the period 1991 to 2001, the paper uncovers little evidence of excess capacity using simultaneous equation techniques; univariate analysis reinforces the findings.

Suggested Citation

  • Das, Abhiman & Ghosh, Saibal, 2005. "Is there excess capacity in rural banking markets: Some empirical insights for India," MPRA Paper 17354, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:17354
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    File URL: https://mpra.ub.uni-muenchen.de/17354/1/MPRA_paper_17354.pdf
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    References listed on IDEAS

    as
    1. Edward J. Frydl, 1993. "Excess capacity in the financial sector: causes and issues," Research Paper 9310, Federal Reserve Bank of New York.
    2. Gary Gorton & Richard J. Rosen, 1991. "Overcapacity and exit from banking," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    regional rural banks; excess capacity; india;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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