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Do public sector banks promote regional growth? Evidence from an emerging economy
Wondemu, Kifle Asfaw
Wondemu, Kifle Asfaw
Publication Date
2018-03
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© 2018 The Applied Regional Science Conference (ARSC) and John Wiley & Sons Australia, Ltd. This is the peer reviewed version of the following article: Arora R and Wondemu K (2018) Do public sector banks promote regional growth? Evidence from an emerging economy. Review of Urban and Regional Development Studies. 30(1): 66-87, which has been published in final form at https://doi.org/10.1111/rurd.12076. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
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2018-02-09
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Abstract
A large literature exists on the relationship between financial development and economic growth. The role of government and public banks in building this relationship has however, remained contentious. In this study in a sub-national level of analysis in the context of large emerging economy, India we raise the question what is the relative impact of public banks in economic growth in the lagging regions vis-à-vis leading regions? Do they matter more than the private and foreign banks? To address these problems, we apply dynamic GMM panel estimator on an unbalanced panel dataset drawn from 25 Indian states covering period 1996/97 to 2008/09. Although our study is in the Indian context, it is relevant for developing countries for mainly two reasons: government ownership of banks has been widely prevalent in developing countries and in many large countries in a federation set-up inter-state differences may exist with multiple ownership of the financial sector.
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Arora R and Wondemu K (2018) Do public sector banks promote regional growth? Evidence from an emerging economy. Review of Urban and Regional Development Studies. 30(1): 66-87.
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