Competitive Dynamics of Indian Housing Finance Industry

Abstract

The growth in housing and housing finance activities in recent years reflects the buoyant state of the housing finance market in the country. The financing institutions have come to see good value in funding this component of the economy. With a growing number of players, the housing sector is becoming increasingly market-driven. The affordability of housing loans clearly appears to have improved with fast-growing number of borrowers. The market has also witnessed change in lending practices in certain segments to accommodate customer needs, as an offshoot of increased competition and a buyers' market. There seems to be a high intensity of competition among different players of the housing finance industry. But this competition needs to be measured to observe the efficiency of the provision of housing finance services, the quality of housing finance products, and the degree of innovation in the sector; etc. The present paper is an attempt to measure the level of competition in Indian housing finance industry for the purpose of which Herfindahl- Hirschman Index (HH Index) has been used as a tool for measuring the concentration.