{
  "title": "India’s Banks: Lending to Productive Firms?",
  "publication": "IMF Working Papers, April 29, 2022",
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  "summary": "Capital misallocation is widely thought to be an important factor underpinning productivity and income gaps between advanced and emerging economies. This paper studies how well Indian banks allocate capital across firms with varying levels of productivity.",
  "sections": [
    {
      "heading": "Key findings",
      "content": "- Capital misallocation is identified as an important factor underpinning productivity and income gaps between advanced and emerging economies.\n- The link between productivity and bank credit growth is weaker for firms with significant ties to public sector banks.\n- The weaker link is especially pronounced in years when public sector banks represent a large share of new credit.\n- Large flows of credit to unproductive firms constitute important missed growth opportunities for more productive firms."
    },
    {
      "heading": "Analysis and evidence",
      "content": "- The paper studies how well Indian banks allocate capital across firms with varying levels of productivity.\n- Results highlight a differential in credit allocation tied to firm relationships with public sector banks versus other banks.\n- Findings indicate that public sector bank dependence and PSB share of new credit are key factors in the observed capital misallocation."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Measures to improve governance of public sector banks would help reduce capital misallocation.\n- Potential policy action includes privatization of public sector banks as one possible avenue to improve allocation efficiency."
    },
    {
      "heading": "Publication and metadata",
      "content": "- Authors: Siddharth George, Divya Kirti, Soledad Martinez Peria, Rajesh Vijayaraghavan\n- Date: April 29, 2022\n- Series: Working Paper No. 2022/073\n- Issue: 073\n- Volume: 2022\n- Pages: 22\n- DOI: https://doi.org/10.5089/9798400206665.001\n- Stock No: WPIEA2022073\n- ISBN: 9798400206665\n- ISSN: 1018-5941\n- Subjects: Bank credit; Commercial banks; Credit; Financial institutions; Money; Production; Productivity; State-owned banks\n- Keywords: allocation of credit; Bank credit; bank lending; capital misallocation; Commercial banks; Credit; credit growth; Global; Productivity; PSB dependence; PSB share; public sector bank; State-owned banks\n\nIMF Working Papers — India’s Banks: Lending to Productive Firms?\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2022/04/29/indias-banks-lending-to-productive-firms-517440"
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    "Authors: Siddharth George, Divya Kirti, Soledad Martinez Peria, Rajesh Vijayaraghavan",
    "Published: April 29, 2022",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400206665.001",
    "Capital misallocation is identified as an important factor underpinning productivity and income gaps between advanced and emerging economies.",
    "The link between productivity and bank credit growth is weaker for firms with significant ties to public sector banks.",
    "The weaker link is especially pronounced in years when public sector banks represent a large share of new credit.",
    "Large flows of credit to unproductive firms constitute important missed growth opportunities for more productive firms.",
    "The paper studies how well Indian banks allocate capital across firms with varying levels of productivity.",
    "Results highlight a differential in credit allocation tied to firm relationships with public sector banks versus other banks.",
    "Findings indicate that public sector bank dependence and PSB share of new credit are key factors in the observed capital misallocation.",
    "Measures to improve governance of public sector banks would help reduce capital misallocation.",
    "Potential policy action includes privatization of public sector banks as one possible avenue to improve allocation efficiency.",
    "Authors: Siddharth George, Divya Kirti, Soledad Martinez Peria, Rajesh Vijayaraghavan",
    "Date: April 29, 2022",
    "Series: Working Paper No. 2022/073",
    "Issue: 073",
    "Volume: 2022",
    "Pages: 22",
    "DOI: https://doi.org/10.5089/9798400206665.001",
    "Stock No: WPIEA2022073",
    "ISBN: 9798400206665",
    "ISSN: 1018-5941",
    "Subjects: Bank credit; Commercial banks; Credit; Financial institutions; Money; Production; Productivity; State-owned banks",
    "Keywords: allocation of credit; Bank credit; bank lending; capital misallocation; Commercial banks; Credit; credit growth; Global; Productivity; PSB dependence; PSB share; public sector bank; State-owned banks",
    "**Working Paper**"
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