How important is ownership in a market with level playing field? The Indian banking sector revisited

Economics

Centre for New and Emerging Markets Discussion Paper Series

2002

It has long been argued that private ownership of firms leads to better firm performance. However, data from emerging markets do not always support this hypothesis. This has given rise to the argument that in these countries the extent of competition drives firm performance more than ownership. In India, banking sector reforms were initiated in 1992, leading to entry deregulation, and a level playing field for all banks. Data for 1995-96 through 1997-98 suggest that by 1997-98 ownership was no longer a significant determinant of performance; competition (and regulations) may have played a bigger role in determining the banks' performance than ownership.

Centre for New and Emerging Markets (closed)

CNEM 24

Centre for New and Emerging Markets Discussion Paper Series

No