MGI examined how India's financial system channels savings from households to investment opportunities throughout the economy. The report provides estimates of the costs of inefficiencies in the financial system and the potential gains to the economy from reforms, as well as setting out an integrated reform program.
MGI's research approach involved measuring India's financial system performance against a comprehensive set of metrics, compared it to that of a range of other countries, and then assessed the flow of funds from savers to users of capital.
Chapter 2: Benchmarking the performance of India's financial system
MGI compares the performance of each component of India's financial system to those in other emerging markets and developed countries, identifies the barriers to further progress, and examines the system's overall financial depth, banking system, equity market, bond markets, and payments system.
Chapter 3: Effect of financial system performance on India's economy
Despite the progress made since 1991, India's financial system fails to capture much of the country's domestic savings and channels the majority of funding to the least productive parts of the economy.
Interactive exhibit Explore the findings of MGI’s research on India’s financial system, how the system’s performance stacks up, and the value of the further reform. Launch interactive exhibit
China and India’s financial systems: A barrier to growth This article looks at the need to reduce government interference in the financial systems of India and China and strengthen market orientation in order to evolve these systems. Read more on the McKinsey Quarterly site
India's financial system: More market, less government A stronger financial system in India would make its economy grow more quickly and ensure higher tax revenues—without higher tax rates. Read more on the McKinsey Quarterly site
Putting China's capital to work: The value of financial system reform A more integrated approach to reforms could reduce the inefficiencies in China’s financial system and bring about big gains for the economy. Read more
