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Banking Reform in India∗ - page 56 / 57

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56 / 57

Figure 1: SSI and Trade Credit

Nationalization and Credit to Small Scale Industry

.05

Share of Credit in 1992

0

-.05

-.1

12

13

14 15 Log Bank Deposits in 1980

16

17

Nationalization and Credit to Trade, Trans. & Finance

.3

Share of Credit in 1992

.2

.1

0

12

13

14 15 Log Bank Deposits in 1980

16

17

Source: Authors calculations, based on data from the Reserve Bank of India. a Each dot represents the average share of credit of two or three banks provided to deposits in 1980, which is graphed along the x-axis. The left line gives the fitted relationship for the banks that were not nationalized while the line on the right gives the fitted relationship for nationalized banks. The distance between the lines at 14.5 is the implied causal impact of nationalization. The sample includes 42 banks, which were aggregated into 19 groups to avoid disclosing any bank-specific information.

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