Changes in Economic Regime and Productivity Growth: A Study of Indian Public Sector Banks
Author(s)
Bhattacharyya, Anjana; Bhattacharyya, Arunava; Kumbhakar, Subal C.
Abstract
Economic liberalization and banking deregulation can increase the total factor productivity (TFP) under a mature commercial banking setup, as the case of the Indian public banking sector shows. Indian commercial banks first underwent the stage of nationalization, which resulted to about 2% annual productivity growth. However, a larger increase followed of 7% followed after liberalization and gradual banking deregulation have taken place. This shows that deregulation has the potential to raise productivity by driving economic competition to promote increases in efficiency.
