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Foreign banks in India: liabilities or assets?

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  • Ghosh, Saibal

Abstract

Using data on Indian banks for 1996-2007, the article examines the impact of foreign banks on the domestic banking sector. The analysis suggests that foreign bank penetration improves profitability and asset quality, although it dampens spreads. The results are robust to alternate measures of foreign bank presence. In addition, foreign banks appear to impact the maturity of credit portfolio of domestic banks. Finally, the results also support the fact that foreign banks typically charge lower interest rates as compared to domestic banks.

Suggested Citation

  • Ghosh, Saibal, 2012. "Foreign banks in India: liabilities or assets?," MPRA Paper 39802, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:39802
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    References listed on IDEAS

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    Cited by:

    1. Edurkar, Ashok & Shaikh, Dr.Atik Asgar, 2016. "Foreign Banks operating in India with specific business practices models and their Scenario Post RBI Road Map 2005," MPRA Paper 73446, University Library of Munich, Germany, revised 31 Aug 2016.
    2. Usman Bashir & Zaheer Abbas & Muntazir Hussain, 2014. "The Effect of Foreign Bank Presence on Domestic Banks Performance: An Evidence from a Developing Economy," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 2(2), pages 36-50, April.
    3. Ghulam, Yaseen & Dhruva, Kamini, 2024. "Banking sector reforms in a challenging environment: An emerging financial market experience," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1074-1096.
    4. Malgorzata Iwanicz-Drozdowska & Pawel Smaga & Bartosz Witkowski, 2017. "Role of Foreign Capital in Stability of Banking Sectors in CESEE Countries," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 67(6), pages 492-511, October.
    5. Edurkar, Ashok & Shaikh, Dr.Atik Asgar, 2016. "Financing India’s Trade under WTO regime and post RBI Road MAP 2005 with reference to Business Practices Models of Foreign Banks," MPRA Paper 73869, University Library of Munich, Germany, revised 20 Sep 2016.
    6. Saibal Ghosh, 2016. "Foreign banks in MENA countries: how important? How relevant?," Journal of Economic and Administrative Sciences, Emerald Group Publishing Limited, vol. 32(1), pages 77-98, May.

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    More about this item

    Keywords

    foreign banks; non-performing loans; credit allocation; interest rates; 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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