Creditor Protection and Banking System Development in India

Deakin, Simon; Demetriades, Panicos; Gregory, James

doi:10.2139/ssrn.1208866

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Creditor Protection and Banking System Development in India

21st Australasian Finance and Banking Conference 2008 Paper

11 Pages Posted: 7 Aug 2008

See all articles by Simon Deakin

Simon Deakin

University of Cambridge - Centre for Business Research (CBR); European Corporate Governance Institute (ECGI); University of Cambridge - Faculty of Law

Panicos Demetriades

University of Leicester - Department of Economics

James Gregory

affiliation not provided to SSRN

Date Written: August 6, 2008

Abstract

We use a new legal dataset tracking changes in creditor protection law over several decades to study the impact of legal reforms on banking system development in India. Cointegration analysis is used to show that the strengthening of creditor rights in relation to the enforcement of security interests in the 1990s and 2000s led to an increase in bank credit. We show that the change in the law was not endogenous to trends in stock market development and GDP per capita, and that the direction of causation ran from legal reform to banking development, rather than the reverse.

Suggested Citation: Suggested Citation

Deakin, Simon F. and Demetriades, Panicos O. and Gregory, James, Creditor Protection and Banking System Development in India (August 6, 2008). 21st Australasian Finance and Banking Conference 2008 Paper, Available at SSRN: https://ssrn.com/abstract=1208866 or http://dx.doi.org/10.2139/ssrn.1208866