ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Is Not the Current Growth Cycle Driven by Bank Credit?

Following a decade of bank reluctance to expand lending, the past three to four years have shown a distinct rise in the bank credit-GDP ratio. There is a strong case for the hypothesis that the acceleration in economic growth since 2003 has been driven by the growth in bank lending across sectors. The resulting growth remains unequal, but the trends indicate that bank finance continues to have a substantial role to play in the growth process and that it deserves to be used as a potent instrument for achieving distributional goals.

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