Title: Impact of sectoral bank credit on economic growth in India - an empirical analysis

Authors: Mehak Gupta; Sonali Aggarwal

Addresses: Guru Gobind Singh Indraprastha University, Dwarka, Delhi, India ' Guru Gobind Singh Indraprastha University, Dwarka, Delhi, India

Abstract: The aim of the present study is on empirically testing the impact of sectoral credit amongst Indian sectors on economic growth. This was achieved by studying the relation between sectoral credit, liquidity and economic growth. The results of the study prove that the sectoral credit was seem to be working on the growth of Indian markets in the long run. On the contrary, it was found that in the short run not only credit was an important factor which impacted the growth of the economy but increase in broad money liquidity, i.e., M3 also impacted sectoral credit which was in favour of our research hypothesis. Similarly, it was also found that past volatility change in terms of different sectors growth was impacting current economic growth again showing the applicability of the concept of increase in sectoral credit and liquidity impacts the economic growth in the Indian markets. However, the external shocks in the variables affect the stable equilibrium in the short run while these stability in the markets were maintained in the long period of time.

Keywords: sectoral credit; economic growth; vector error correction model; VECM; impulse response; M3; ADF stationarity test; regression.

DOI: 10.1504/IJEA.2022.119615

International Journal of Economics and Accounting, 2022 Vol.11 No.1, pp.20 - 41

Received: 28 May 2020
Accepted: 15 Feb 2021
Published online: 11 Dec 2021 *