Economic Growth and Banking Credit in India

20 Pages Posted: 8 Dec 2016

See all articles by Charan Singh

Charan Singh

Indian Institute of Management (IIMB), Bangalore

Subhash Pemmaraju

Boston University, Students

Rohan Das

EXL Service

Date Written: December 8, 2016

Abstract

The interdependence between credit expansion and economic growth has been a subject of some debate. While some economists contest that the development of the financial system is a byproduct of economic growth others assert that credit expansion is critical for growth itself. India’s impetus on expanding its banking reach and recent changes in the way transactions are being done begs the question whether such changes directly affect the growth trajectory. This paper aims to examine and understand the relationship between credit and growth in India in the last few decades. Different metrics for credit and output is used to test the relationship at an overall as well as sectoral level. The findings indicate a strong relationship between the two variables.

Keywords: bank credit, granger causality, co-integration, credit and economic growth

Suggested Citation

Singh, Charan and Pemmaraju, Subhash and Das, Rohan, Economic Growth and Banking Credit in India (December 8, 2016). IIM Bangalore Research Paper No. 531, Available at SSRN: https://ssrn.com/abstract=2882398 or http://dx.doi.org/10.2139/ssrn.2882398

Charan Singh (Contact Author)

Indian Institute of Management (IIMB), Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India
080-26993818 (Phone)

Subhash Pemmaraju

Boston University, Students ( email )

Boston, MA
United States

Rohan Das

EXL Service ( email )

Noida
India

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