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Bank Ownership and Margins of Trade: Evidence from a Firm-Bank Matched Dataset

Research output: Working paper

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Bank Ownership and Margins of Trade : Evidence from a Firm-Bank Matched Dataset. / Chakraborty, Pavel.

Lancaster : Lancaster University, Department of Economics, 2019. (Economics Working Papers Series).

Research output: Working paper

Harvard

Chakraborty, P 2019 'Bank Ownership and Margins of Trade: Evidence from a Firm-Bank Matched Dataset' Economics Working Papers Series, Lancaster University, Department of Economics, Lancaster.

APA

Chakraborty, P. (2019). Bank Ownership and Margins of Trade: Evidence from a Firm-Bank Matched Dataset. (Economics Working Papers Series). Lancaster University, Department of Economics.

Vancouver

Chakraborty P. Bank Ownership and Margins of Trade: Evidence from a Firm-Bank Matched Dataset. Lancaster: Lancaster University, Department of Economics. 2019 Nov 30. (Economics Working Papers Series).

Author

Chakraborty, Pavel. / Bank Ownership and Margins of Trade : Evidence from a Firm-Bank Matched Dataset. Lancaster : Lancaster University, Department of Economics, 2019. (Economics Working Papers Series).

Bibtex

@techreport{092d619ed3864408a4090ea3e4659945,
title = "Bank Ownership and Margins of Trade: Evidence from a Firm-Bank Matched Dataset",
abstract = "Does a bank's ownership matter for a firm's performance (to which it is connected)? Especially, in the event of a crisis? I study this question through the effect of 2008-09 crisis to provide evidence on a new channel which matters significantly for a firm's export performance - bank ownership. In particular, I find: (a) firms connected to private and/or foreign banks earn around 7.7- 39% less in terms of their export earnings during the crisis as compared to firms' having banking relationships with public-sector banks. This happened as the public-sector banks were differentially treated by the Central Bank of India during the crisis due to a clause in the Indian Banking Act of 1969; (b) effect is concentrated only on the intensive margin of trade; (c) drop in exports is driven by firms' client to big domestic-private banks and banks of US origin; (d) firmsnot connected to public-sector banks also laid-o¤ workers (both managers and non-managers), employed less capital and imported less raw materials. In addition, I also find that firms with lower average product of capital (than the median) received about 50% more loans from the public-sector sources, suggesting a significant reinforcement of inefficiency in the Indian economydue to misallocation of credit.",
keywords = "Bank Ownership, 2008-09 Financial Crisis, Public-sector Banks, Private and/or Foreign Banks, Exports",
author = "Pavel Chakraborty",
year = "2019",
month = nov,
day = "30",
language = "English",
series = "Economics Working Papers Series",
publisher = "Lancaster University, Department of Economics",
type = "WorkingPaper",
institution = "Lancaster University, Department of Economics",

}

RIS

TY - UNPB

T1 - Bank Ownership and Margins of Trade

T2 - Evidence from a Firm-Bank Matched Dataset

AU - Chakraborty, Pavel

PY - 2019/11/30

Y1 - 2019/11/30

N2 - Does a bank's ownership matter for a firm's performance (to which it is connected)? Especially, in the event of a crisis? I study this question through the effect of 2008-09 crisis to provide evidence on a new channel which matters significantly for a firm's export performance - bank ownership. In particular, I find: (a) firms connected to private and/or foreign banks earn around 7.7- 39% less in terms of their export earnings during the crisis as compared to firms' having banking relationships with public-sector banks. This happened as the public-sector banks were differentially treated by the Central Bank of India during the crisis due to a clause in the Indian Banking Act of 1969; (b) effect is concentrated only on the intensive margin of trade; (c) drop in exports is driven by firms' client to big domestic-private banks and banks of US origin; (d) firmsnot connected to public-sector banks also laid-o¤ workers (both managers and non-managers), employed less capital and imported less raw materials. In addition, I also find that firms with lower average product of capital (than the median) received about 50% more loans from the public-sector sources, suggesting a significant reinforcement of inefficiency in the Indian economydue to misallocation of credit.

AB - Does a bank's ownership matter for a firm's performance (to which it is connected)? Especially, in the event of a crisis? I study this question through the effect of 2008-09 crisis to provide evidence on a new channel which matters significantly for a firm's export performance - bank ownership. In particular, I find: (a) firms connected to private and/or foreign banks earn around 7.7- 39% less in terms of their export earnings during the crisis as compared to firms' having banking relationships with public-sector banks. This happened as the public-sector banks were differentially treated by the Central Bank of India during the crisis due to a clause in the Indian Banking Act of 1969; (b) effect is concentrated only on the intensive margin of trade; (c) drop in exports is driven by firms' client to big domestic-private banks and banks of US origin; (d) firmsnot connected to public-sector banks also laid-o¤ workers (both managers and non-managers), employed less capital and imported less raw materials. In addition, I also find that firms with lower average product of capital (than the median) received about 50% more loans from the public-sector sources, suggesting a significant reinforcement of inefficiency in the Indian economydue to misallocation of credit.

KW - Bank Ownership

KW - 2008-09 Financial Crisis

KW - Public-sector Banks

KW - Private and/or Foreign Banks

KW - Exports

M3 - Working paper

T3 - Economics Working Papers Series

BT - Bank Ownership and Margins of Trade

PB - Lancaster University, Department of Economics

CY - Lancaster

ER -