1. – Professor, Department Of Economics, Panjab University, Chandigarh
| Received
27-Feb-2019 |
Accepted
- |
Published
27-Feb-2019 |
Abstract
The present paper argues that if
banks and central banks are sensitive
to growth prospects that create
both good assets (for banks)
and better macro fundamentals
(for the central bank), NPAs as a
percentage of advances would be
low. The argument rests on an endogenous
money thesis that supports
higher growth of advances
that in turn permits expansions,
expansion-led learning by doing
and further investment opportunities
that are more productive.
Rate of interest policy that best
attends to this growth prospects
and bank advances nexus best
manages monetary prospects, including,
of course, NPAs issues.
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