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Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Bank ownership and firm performance
AU - Chakraborty, P.
PY - 2024/1/1
Y1 - 2024/1/1
N2 - Does a bank's ownership matter for the performance of a firm to which it is connected, especially in the event of a crisis? I study this question through the effect of the 2008–9 crisis on Indian manufacturing firms to provide evidence on a new channel that can matter significantly for a firm's performance—bank ownership. I find that firms connected to private (domestic and foreign) banks earned around 10% and 25% less from sales and exports, respectively, during the crisis, as compared to firms having banking relationships with public-sector banks. This happened as private banks were affected differentially in terms of credit supply from the Central Bank and withdrawal of deposits. Firms connected to private banks also laid off more workers, and imported fewer capital goods. Finally, these effects are significant across the size distribution of the firms (except the smallest firms), for firms producing intermediates, and about 40% less for firms that belong to a business group.
AB - Does a bank's ownership matter for the performance of a firm to which it is connected, especially in the event of a crisis? I study this question through the effect of the 2008–9 crisis on Indian manufacturing firms to provide evidence on a new channel that can matter significantly for a firm's performance—bank ownership. I find that firms connected to private (domestic and foreign) banks earned around 10% and 25% less from sales and exports, respectively, during the crisis, as compared to firms having banking relationships with public-sector banks. This happened as private banks were affected differentially in terms of credit supply from the Central Bank and withdrawal of deposits. Firms connected to private banks also laid off more workers, and imported fewer capital goods. Finally, these effects are significant across the size distribution of the firms (except the smallest firms), for firms producing intermediates, and about 40% less for firms that belong to a business group.
U2 - 10.1111/ecca.12502
DO - 10.1111/ecca.12502
M3 - Journal article
VL - 91
SP - 238
EP - 267
JO - Economica
JF - Economica
SN - 0013-0427
IS - 361
ER -