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Date Published:Nov 1, 2007
In 1980, India nationalized its large private banks. This induced different bank ownership patterns across different towns, allowing credible identi cation of the effects of bank ownership on nancial development, lending rates, and the quality of intermediation, as well as employment and investment. Credit markets with nationalized banks experienced faster credit growth during a period of nancial repression. Nationalization led to lower interest rates and lower quality intermediation, and may have slowed employment gains in trade and services. Development lending goals were met, but these had no impact on the real economy.