Financial Crises and Deposit Spill over: A Markov Regime Switching Approach
- 1. Symbiosis Institute of Business Management, Symbiosis International (Deemed University), Lavale, Pune, Maharashtra, India
- 2. Indian Institute of Management, Nagpur, VNIT Campus, Maharashtra, India
- 3. PhD Research Scholar, ICFAI University, Jharkhand, India
Description
Abstract: The study attempts to empirically analyze the impact of the financial crises happened in the Indian economy and the deposit spill over witnessed among public and private sector banks in India. We have taken the bank deposit and credit from 1993 to 2020, by considering four major financial crises into account. It has been observed that, during the non-crisis period, commercial banks focused on deposit and seamless lending as the market appeared normal. Nevertheless, in the crisis period, the banks did restrain from lending as the market encountered unusual shocks. As far as the lending cycle is concerned, it grew during the non-crisis period, and contracts in crisis period over the crises.
Keywords: Financial Crisis, Deposit spill-over, Markov Switching Model
JEL Classification number: C24, G01, G21
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