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Title: |
Other Financial Institutions' Portfolio Behaviour and Policy Implications: A Study of India |
| Author: |
Tomoe Moore and Christopher J. Green |
| Author
Affiliation: |
Coventry University, Coventry, UK; Loughborough University, Loughborough, UK |
| Source: |
International Economic Journal, December 2005, v. 19, no. 4, pp. 543-562 |
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Publication Date: |
December 2005 |
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Abstract: |
Applied literature has largely neglected the asset decision of other financial institutions (OFIs), though it may possess important policy implications. In this paper, portfolio behaviour of OFIs in India is modelled by using the annual flow of funds data for 1951/52 to 1993/94. The long-run model of the Almost Ideal Demand System and the allied concepts of cointegration generated economically and statistically plausible results. We find a strong influence of interest rates on portfolio behaviour, thereby the role of interest rates on resource allocation. The paper concludes that, the macroeconomic management through monetary policy actions may not be unnecessarily limited through the channel of OFIs in the post-industrial reform regime in India. |
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