Impact of insolvency and bankruptcy code on public sector banks through credit lending channel. Indian experience

Key Points

• Public sector banks show enhanced credit lending following the implementation of insolvency and bankruptcy code.
• The analysis indicates a 15% increase in credit access within two years of the code's introduction.
• Observational analysis across major public sector banks reveals changes in lending patterns related to insolvency outcomes.
• The findings support the idea that stronger insolvency measures may help stabilize financial institutions.