are rated and sold to investors.Without ratings, banks with good loans retain a portion of them to signal quality to … investors. With informative ratings, banks rely less on costly retention and more on public information. Moreover, when ratings … are sufficiently accurate, banks may eschew retention altogether and simply originate to distribute (OTD). Thus, ratings …

ask whether public and private banks deployed resources freed up by reduced state preemption to increase credit to the … private sector. We find that even after liberalization, public banks allocated a larger share of their assets to government … securities than did private banks. Crucially, we also find that public banks were more responsive in allocating relatively more …