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Several research efforts were dedicated to analysing the effects of foreign direct investment (FDI) inflows on gross domestic product (GDP) and employment in the host economies. The variations in the conclusions signal that other variables influence and moderate the effects of FDI on GDP and employment. Institutional elements receive limited research attention, despite their influence on the host economies. This paper investigates the moderating role of institutional elements in the FDI-host economies on FDI’s effects on GDP and employment with China and India as case studies. The approach utilises three principal methodologies. The first methodology presents an in-depth analysis of China and India, highlighting selected institutional elements with the potential to influence FDI’s effects. The second methodology confirms the presence of a positive correlation between FDI and GDP and a negative correlation between FDI and employment-to-population ratio (EPR) in both China and India. The FDI, GDP purchasing power parity per capita, and EPR datasets are extracted from the World Bank – DataBank World Development Indicators to ensure the consistency of the data. The results of the quantitative analysis validate the qualitative analysis. The qualitative analysis confirms the moderating role of the selected institutional elements with variations in direction and strength. Significant variations in FDI’s effects on GDP and employment are strongly related to variations in the institutions of governance. The institutions of governance include the functionality of the state organs, the efficiency of the legal system and enforcement of the rule of law, and the quality of implementation of FDI-supportive policies. The findings aim to increase the absorption of the positive effects of FDI on GDP and employment in the respective countries. The research is a cornerstone of in-depth future research into the following areas: the role of selective FDI and constructive conditional FDI policies, the functionality of judicial authority controls, and FDI favourable exchange rates and interest rates policies. The novelty and contribution of the paper lie in its comprehensive exploration of the moderating role of institutional elements on the effects of FDI on GDP and employment in host economies, with a specific focus on China and India. The paper contributes significantly to the academic literature on FDI and economic development by emphasising the importance of institutional factors and providing actionable insights for policymakers and researchers. [ABSTRACT FROM AUTHOR]

Purpose: Interest rate derivatives (IRDs) are the essential components of financial risk management and are used across various industry sectors. The objective is to analyze the differences in approach to managing interest rate risks between the Indian corporates that execute IRDs and the ones that do not. Design/methodology/approach: Interest rate fluctuations require Indian corporates to hedge their exposures in foreign currency interest rates. This is all the more true for mid-sized corporates because of their balance sheet exposures. Additionally, they may not have the resources to formulate risk management policies. This paper analyzes data collected from financial statements of a diverse set of companies that use IRD and helps in formulating such a strategy. Findings: The results indicate significant differences for some of the parameters like information asymmetry and agency cost between users and non-users of IRDs. The study further suggests causality between users of derivatives and parameters like size, growth and debt. Research limitations/implications: The study compares users and non-users of IRDs, thereby identifying factors unique to users of IRDs. It also studies causality relations which explain the motivation to do IRDs. Thus, it enables risk managers to use this as a reference point to decide on their strategies. Originality/value: While there are multiple studies across geographies and sectors including commercial banks in India on the usage of interest rate swaps, this study focuses on Indian mid-tier corporates. Furthermore, the study distinguishes between users and non-users based on financial parameters, which in turn would provide a framework for decision-hedging strategies. [ABSTRACT FROM AUTHOR]

Purpose: This study aims to assess the efficiency of managing working capital in 1,388 Indian manufacturing firms from 2008 to 2019 and investigate the effects of firm-specific and macro-level determinants on working capital management (WCM) efficiency. Design/methodology/approach: The current study accommodates a slack-based measure (SBM) in data envelopment analysis (DEA) for computing WCM efficiency. Further, we implement a panel data fixed-effects model that controls for heterogeneity across firms in determining the relationships of selected variables with WCM efficiency. Findings: The results highlight that manufacturing firms operate at around 50 percent efficiency, which is constant throughout the study period. Furthermore, among the selected variables, yield, earnings, age, size, ability to create internal resources, interest rate and gross domestic product (GDP) significantly affect WCM efficiency. Originality/value: Instead of the traditional models used for assessing efficiency, the SBM-DEA model is unit-invariant and monotone for slacks, implying that it can handle zero and negative data, which overcomes the incapability of prior DEA models. Hence, this provides accurate efficiency scores for robust analysis. Additionally, this paper provides a holistic working capital model recognizing firm-specific and macro-level determinants for a more explicit estimation of the relationship between WCM efficiency and the selected determinants. [ABSTRACT FROM AUTHOR]

The crowding out effect is an economic theory which argues that rising government spending or borrowing drives down private sector spending. In simple words, if the government borrows huge money from the money markets, then the private borrowers do not get access to the required capital. The excessive government borrowings can also influence interest rates, thus impacting the cost of funds for commercial borrowers. This paper tests, using statistical tools, if government borrowing affects the availability of funds for commercial enterprise. If it affects the availability of funds for private enterprises, then it could impact private sector spending. The paper also tests if government borrowing impacts the interest rates and consequently the cost of funds for private borrowers. [ABSTRACT FROM AUTHOR]

This paper establishes a predictive relationship between financial vulnerability and volatility in emerging stock markets. Focusing on China and India and utilizing GARCH-MIDAS models, we show that incorporating financial vulnerability can substantially improve the forecasting power of standard macroeconomic fundamentals (output growth, inflation and monetary policy interest rate) for stock market volatility. The findings have significant implications for investors to improve the accuracy of volatility forecasts. [ABSTRACT FROM AUTHOR]

In India, the non-accessibility of credit and banking facilities to poor and vulnerable segments of society has always been a major concern. Several steps have been taken from time to time by the Government and the Reserve Bank such as nationalization of banks, prescription of priority sector lending criteria and concessional interest rate for the weaker segment of society. It was, however, realized that further direct efforts were required to address the credit needs of poor people. In response to this requirement, the Micro finance movement started in India. The aim of this paper is to inspect the current status, challenges and potential of Microfinance in India. Descriptive research methodology is followed and analysis is done based on data available from secondary sources. This paper illustrates present challenges and potentials in Microfinance in India considering data of last ten years. This paper concludes with the finding that South Region of India is doing great and North Region of India is lacking in SHGs -- Bank Linkage Programme. [ABSTRACT FROM AUTHOR]

Prosocial P2P lending platforms are a novel and powerful example of a digital social innovation (DSI) in which the operating model relies primarily on digital technologies and the overarching focus is on the "social" aspect of the innovation. These platforms establish a virtual connection between low‐income individuals and lenders, helping the former access loans at low rates of interest. In realising their mission of fighting poverty, prosocial P2P lending platforms maintain a challenging hybrid – online and offline – focus. This paper explores how prosocial P2P lending platforms enact their hybrid orientation. It draws on an inductive qualitative study of Rang De, India's first prosocial P2P lending platform. The analysis highlights five clusters of actions: digital attention‐building, digital credibility‐building, digital empathy‐building, intermediary relationship‐building, and borrower relationship‐building. The paper argues that significant strengths on the online side help establish a sustainable business model. A willingness and commitment to maintain a high degree of engagement with the complex offline world of low‐income borrowers helps develop the model as an impactful social innovation. [ABSTRACT FROM AUTHOR]

Purpose: This paper analyses the relationship between financial sector development (FSD) and life insurance inclusion in India during the period from 1971–1972 to 2016–2017. The study analyses the effect of financial deepening on life insurance inclusion in India. Design/methodology/approach: The study employs augmented Dickey–Fuller (ADF) unit roots test to check the stationarity properties of the time series data. It estimates a life insurance inclusion model using the auto-regressive distributed lag model (ARDL) bounds testing approach to cointegration. Findings: The study finds evidence of a cointegrating relationship between financial deepening and life insurance inclusion in India. A significant error correction coefficient indicates automatic adjustments to short-run disequilibrium, reinforcing the cointegrating relationship between financial sector and life insurance inclusion. Research limitations/implications: A major limitation of the study is that it excludes the first-time sum assured (FSA) contributed by the private sector life insurance companies due to lack of data availability. Practical implications: The results of the study call for faster expansion of the financial sector and provision of a low interest rate regime in the Indian economy. The study invokes the need for sufficient training to the personnel in the banking and non-banking institutions to cater to the complex needs of life insurance buyers. Originality/value: The paper estimates the link between FSD and life insurance inclusion and introduces a new measure of life insurance demand, the life insurance inclusion, measured using the FSA. [ABSTRACT FROM AUTHOR]

Purpose Under the traditional franchise value paradigm, competition in banking markets is considered to be risk enhancing because of its tendency to raise interest rates on deposits. Taking a contrarian view, Boyd and De Nicolo (2005) have argued that competition in the loan market can lead to lower interest rates and hence reduce bank risk-taking. Following these contradictory theoretical results, the empirical evidence on the relationship between risk and competition in banking has also been mixed. This paper analyses the competition–stability relationship for the Indian banking sector for the period 1999-2000 to 2012-2013.Design/methodology/approach Banking competition is measured using structural measures of concentration, namely, five-bank concentration ratios and the Herfindahl-Hirschman Index as well as a non-structural measure of competition – the Panzar-Rosse H-Statistic. Panel regression methods are used to estimate the relationships.Findings Our results show that while concentration leads to lower levels of default, market and asset risks, it exacerbates the levels of capital and liquidity risks.Practical implications These results have interesting implications for banking sector policy in emerging economies. For instance, any strategy on entry of new banks has to be carefully coordinated with supervisory efforts and macro-prudential policy to derive the benefits of greater competition in the banking industry.Originality/value This is the first paper that analyses the competition – stability relationship using a large number of alternative measures for the banking sector, an emerging economy. [ABSTRACT FROM AUTHOR]

Purpose: Timely access to reasonably priced financing is critical to promote and sustain small and medium sized businesses (SMEs). This study aims to examine the role of the newly constituted SME exchanges in funding the growth of Indian SME firms. The impact of obtaining public equity capital on the firm's growth prospects, capital structure and credit profile is the focus of this paper. In addition, this study compares the cost and speed of raising capital on specialised SME exchanges to the main board. Design/methodology/approach: To examine the impact of raising public equity capital, this study uses a difference-in-difference (DID) regression analysis. SMEs that raised financing on the SME exchange between 2013 and 2018 make up the treatment sample. This study uses a propensity score matching technique to find the control group from a sample of unlisted enterprises to reduce the likelihood of selection bias. Findings: This study finds that SME profitability drops after an initial public offering (IPO), which is consistent with previous research. This study also discovered that after a company is listed, its total debt falls. This study also shows that after the IPO, there is no change in the borrowing costs of SME enterprises. Finally, this study finds an evidence of a decline in sales growth following the IPO, implying that the firms use the IPO money to rebalance their accounts after a period of heavy investment rather than for growth finance. Originality/value: A thriving and efficient equity financing market for SMEs has the potential to establish itself as a viable alternative to the existing dominant bank financing option. To the best of the authors' knowledge, this research is the first to examine the role of SME exchanges in the funding of Indian SME firms. [ABSTRACT FROM AUTHOR]

With the current depletion of fossil fuels and its price hikes, the need of the hour is an alternative source of energy for the vehicles. Electric Vehicles are the solution for the industry as well as for the environment in India. However, the current market penetration of electric vehicles is rather low. There is a need to study the factors influencing the consumer's acceptance of such electric cars. Various factors that influence the purchase decision of car buyers are based on individual perception of dimensions like environmental issues, cost, trust, technological advancement, infrastructure and societal acceptance. The results of the study show that positive environmental effects associated with electric cars along with the no costs of fuel involved happen to be the biggest motivators for the consumer when it comes to purchasing electric cars. On the contrary, cost of the electric car and lack of charging infrastructure happen to be the factors which demotivate adoption of electric cars. Thus, to promote the sales of electric cars the government has to play a leading role by developing satisfactory infrastructure, creating environmental policies, subsidizing the cost of the electric vehicles and providing financial incentives like lower interest rate on car loans and tax reductions on the purchase of electric cars. Through this paper, the potential scope of electric cars in the city of Kolkata will be studied and the consumer perception for same will be analysed. [ABSTRACT FROM AUTHOR]

This paper analyzes the economics of a grid-interactive rooftop solar photovoltaic (PV) system and the impact of the temperature on it. The analysis related to energy metrics, lifecycle costing, and environmental economics was performed considering the PV system's life as 30 years. The system economics is also compared at different conditions like theoretical, temperature-corrected, and real electricity generation data. The parameters like energy payback time (EPBT), energy return on energy invested (EROI), and lifecycle conversion efficiency are determined as 5.95 years, 5.04, and 0.078, respectively, based on actual generation. The unit electricity cost of the rooftop PV system was estimated as INR 5.37 at the 5% interest rate. The electricity cost varies with the interest rate variation and operation system life. The results show a reduction in overall economic performance on the increase in module temperature. The effect of temperature on the economics of the system is presented in terms of the per degree rise of module temperature. One degree increase of module temperature 8.5 days in EPBT of the PV system increases, and INR 0.021 increases in the unit cost of electricity considering a reference temperature 25 °C. A PV system has environmental benefits by reducing greenhouse gas emissions, which are also affected by the rise of module temperature. The system lost INR 355.93 in carbon credits at an increase of one-degree module temperature. [ABSTRACT FROM AUTHOR]

Covid-19 (C-19) has resulted in economic and financial meltdowns across the world. The countermeasures to tackle the virus created economic loss for people from every stratum. Macroeconomic indices like unemployment, inflation, and GDP growth rates were severely hit. This study estimates the C-19's volatility impact on four macroeconomic variables (gold prices, interest rate, crude oil prices, and exchange rate in the Indian economy. The paper uses daily time series data of the macroeconomic variables and cases of C-19 in India for the period from 5th January 2020 to 4th April 2022. The volatility impact of COVID-19 is measured using Bi-Variate GARCH models. The GARCH models (BEKK-GARCH [BG] and DCC-GARCH [DG]) provide robust results. The result finds the existence of both short and long-term C-19's volatility impact on all variables, although in different degrees. This paper is original since it considers the impact of these four variables altogether and the study contributes to the literature by capturing the volatility spillover effects of these four variables using BEKK-GARCH and DCC-GARCH. This paper significantly delivers key implications to policymakers to critically treat C-19 for economic stability while making policies. [ABSTRACT FROM AUTHOR]

Monetary policy is often expected to adopt a pro-growth stance in a phase of prolonged slowdown in growth and sluggish investment activities. Sacrificing inflation, i.e. lowering nominal policy rate even when inflation persists at a high level, is a convenient means to lower real interest rates, which in turn could be seen as a pro-growth stance of monetary policy. Using both firm level and macroeconomic data, and alternative methodologies -- such as panel regression, VAR, quantile regression and simple OLS -- this paper finds that for 100 bps decline in real interest rate, investment rate may improve by about 50 bps and GDP growth may pick up by about 20 bps. This paper, however, provides robust empirical justification against pursuing a policy of lowering monetary policy interest rates when inflation persists above a threshold level of 6 per cent. The beneficial impact of lower real rates on growth that may be achieved through higher inflation tolerance is more than offset by the harmful effect of high inflation, particularly when it exceeds a threshold level of 6 per cent. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of the paper is to examine the impact of macroeconomic variables on the capital structure of manufacturing companies in the Indian context. Design/methodology/approach: The paper employs panel regression technique (random effects model) on a sample of 1,029 listed Indian manufacturing companies divided into two categories – large-size companies and mid-size companies for the last ten years from FY 2008–09 to FY 2017–18. Two separate models pertaining to long-term leverage (TTL_TNW ratio) and total leverage (TOL_TNW) have been examined. Findings: Major findings show that macroeconomic variables play a relatively more important role in deciding the long-term debt component in the capital structure of the firms as compared to short-term loans. Similarly macroeconomic variables are found to be more significant in case of large-size companies as compared to mid-size companies. Also, there is a negative relationship between market capitalisation and leverage and bank credit and leverage, whereas money supply has a positive relationship with leverage. Research limitations/implications: The study makes an important contribution to the existing literature in understanding better how macroeconomic variables play an important role in determining the capital structure of firms. In the present dynamic economic environment, such a study lays down the macro areas on which the academicians, policymakers and financial managers can focus with respect to corporate financing decisions. The firm-specific factors have not been taken into account. Inclusion of these factors will make the results more robust. Originality/value: The study focusses on the impact of macroeconomic variables on the capital structure decision of the Indian firms. Several studies in this area have been done in the context of the developed countries. However, there are not many studies in the Indian context that examine the relationship between financing decision and macroeconomic variables. The results that have been derived in case of developed economies may not be extended in the Indian context as there are considerable differences across countries related to corporate and legal environment, taxation system, corporate governance laws, interest rate environments, banking system, sources of funds and so on. Therefore, it becomes important to focus on countries individually. [ABSTRACT FROM AUTHOR]

The appeal of Monetary Conditions Index either as an operating target or a monetary policy rule has waned over time. Its utility for assessing the monetary policy stance through the lens of alternative channels of monetary policy transmission, however, continues. This paper attempts to construct MCIs for India by approximating four major channels of transmission - interest rate, exchange rate, credit, and asset prices - and examine their suitability to assess the stance of monetary policy as well as the inflation outlook. The weights for these MCIs have been derived using ordinary least squares (OLS) as well as by employing impulse responses of shocks within a structural vector autoregression (SVAR) framework. Empirical findings establish the dominant influence of the interest rate channel in India and support MCIs as useful coincident indicators of monetary policy stance and as a relevant lead indicator of inflation. [ABSTRACT FROM AUTHOR]

Purpose: The paper aims to discern the cyclical appearance of the Non-Performing Assets with special emphasis to the Indian Banking Industry. It further aims to determine what factors cause such behaviour of the Non-Performing Assets. Also, an attempt has been made to make a comparison in between Public sector, private sector and foreign sector banks. Design/Methodology/Approach: Descriptive research is employed to fulfill the said objectives. Both external (macro-economic variables such as business cycle shocks, current state of the economy, expected and unexpected growth of the economy) and internal (bank specific variables such as loan interest rates, proportion of unsecured loans to total loans, size, leverage, term loans, cost conditions, credit to deposit ratio, secured and unsecured lending) variables are regressed on the net performing assets of Indian public sector, private sector and foreign banks. Panel data regression has been applied on three categories of banks for a period of thirteen years from 2004-05 to 2016-17. Practical Implications: The study helps the regulators in estimating that how the macro-economical variables such as business cycle events can change the conduct of NPAs. It also helps banks in determining the important factors that may cause the cyclical behaviour of their non-performing assets and adopt the strategies to mitigate the problem of NPAs accordingly. Research Limitations: The study is restricted to the Indian sector only. A comparison with other emerging nations can also be made. The scope of the study is restricted to limited variables for a specific period of time. Originality/Value: The paper brings the most recent empirical results related to Indian banking industry. The behaviour of NPAs is examined and possible reasons for such conduct is discerned. Additionally, complete banking industry of India including all types of scheduled commercial banks have been taken bringing the most comprehensive picture of the present situation. [ABSTRACT FROM AUTHOR]

Emerging exchange rate volatility and the uncertainty in exchange rate markets have become issue of concern for all countries, but these issues are intractable substantially for developing countries. This paper analyses the relationship between exchange rate and gross domestic product, external debt, foreign exchange reserve, interest rate, money supply in India covering the period 2008-2018. This study utilized time-series Vector Error Correction Model approach of unit root test, co-integration test, residual test and granger casualty test. The findings indicated that external debt and interest rate influences the exchange rate as displayed by Granger casualty test. Subsequently, exchange rate influences external debt, interest rate and money supply as shown by Granger casualty test. Taking into account a long-term relationship, external debt, foreign exchange reserves and interest rate moves positively however, gross domestic product and money supply moves negatively with exchange rate volatility in India. Future researchers should try to cover longer duration of study of above 10 years with different variable like crude oil price, trade balance, and foreign institutional investment. [ABSTRACT FROM AUTHOR]

This paper investigates the nonlinear impacts of fiscal balances on interest rates, exchange rates and inflation in large emerging economies. The paper applies asymmetric cointegration modelling in a nonlinear autoregression distributed lag framework to discriminate the effects of negative and positive changes in the fiscal balance on monetary variables in BRICs. This approach is advantageous to the analysis of dynamic asymmetric relationships in both the long and short run regardless of whether variables are a mix of I(0) and I(1). A distinctive feature of this study is that the main result indicates that monetary variables react differently to negative and positive changes in fiscal balances over the long run for Brazil and India, but not for the others. Since interest rates and inflation are more sensitive to worsening fiscal position, fiscal consolidation is an essential criterion for the effectiveness of monetary policy in the economies characterised with large fiscal imbalance and debt stocks, such as Brazil and India. The implementation of expansionary fiscal policy should be reconsidered carefully in economies with a better fiscal performance like China and Russia, since the persistently rising budget deficits eventually countered the effectiveness of monetary policy by keeping market interest rates and inflation at high levels. This paper provides evidence in favour of the dominant role of fiscal policy to stabilise monetary variables in large emerging economies. We also highlight the importance of long-term fiscal sustainability to improve the monetary policy effectiveness. [ABSTRACT FROM AUTHOR]

Using cross‐section data on small and medium enterprises (SMEs), the paper examines the importance of gender on discouraged borrowers in India. We distinguish the role of women across various capacities, such as owner, manager and owner‐manager. Controlling for potential endogeneity, the findings indicate that firms with women managers and those where women perform dual roles are more likely to be discouraged from borrowing. Furthermore, we show that interest rates and procedural complexities to be the key reasons that inhibit borrowing. Robustness tests lend credence to these findings. [ABSTRACT FROM AUTHOR]

The paper investigates the nature of credit transactions in artisanal marine fishing in a developing economy by analysing the case of Kerala, a south Indian state of India. The study examined the structure of credit in marine fishing and its composition; interlocked credit-market and credit-labour transactions; segmentation of credit market; interest rate variations, and the potential reasons for high penetration of informal credit in marine fisheries in the background of a relatively better developed formal financing system in sectors outside fishing. The study concludes that the risk-sharing role of the informal credit in addressing the high variability of the income stream in marine fishing and the failure of the formal system to develop credit products internalising the risk element perpetuates the informal credit dominated by output-credit interlocking between fishers and auctioneer-creditors. While the fishers share the risk of high variability in income stream through the sharing arrangement, the auctioneer-creditors are assuring the flow of fish to be auctioned. However, the system is not without "exploitative elements" triggered by the monopoly power of stakeholders, particularly auctioneer-lenders. The traditional "triadic system" involving fishers, auctioneer-lenders and the society as regulators of trust that sustained the informal credit system is weakening due to extraneous forces. The study highlights the need to have credit products that bundle insurance. [ABSTRACT FROM AUTHOR]

The microfinance sector has played a vital role in economic development and financial inclusion in India. However, with the COVID-19 pandemic affecting economic activities, microfinance institutions (MFIs) were impacted adversely. The Government of India introduced a moratorium to borrowers for loan repayments. This study examines the impact of the government's initiative of easing borrowers' financial burdens and the number of active COVID-19 cases on the operational efficiency of MFIs in Indian states. Additionally, the analysis explores the macro-economic determinants of MFI performance. The study incorporates the random effects robust regression model. The findings suggest that interest rate and inflation impact every MFI performance criterion while national income only affects the loan penetration efficiency of MFIs. It is also found that the moratorium significantly helped borrowers, whereas, it had adverse effects on the loan penetration by MFIs. Lastly, it is shown that MFIs remained resilient to COVID-19 cases, except in the case of reduced number of borrowers. [ABSTRACT FROM AUTHOR]

The interest rate transmission mechanism of monetary policy to real economic activity has been the center of interest of many researchers globally. The aim of this paper is to study the impact of the policy interest rate (both nominal and real interest rates) on the output gap in India for the period from May 2001 to March 2015 using monthly data, and explore whether the Reserve Bank's switching to inflation targeting has hampered the growth objective. The paper uses Autoregressive Distributed Lag (ARDL) cointegration approach to study the long-run and shortrun dynamics of the objective variables. It takes sufficient number of lags to handle the problem of endogeneity mostly present amongst macroeconomic variables. The study finds presence of interest rate puzzle, where the conventional negative relationship between output and interest rate is broken. It suggests the presence of some other factors such as business mood, investment uncertainty, presence of parallel economy or the time period which was dominated by global financial crisis and its aftermath as the possible reasons for the decline in growth rate. [ABSTRACT FROM AUTHOR]

Interest payments based on income flows are a common feature of informal loans. Such so-called 'interlinked loans' can be seen as insurance against very low disposable incomes, as interest payments are lowest when income turns out to be low. This paper examines whether interlinked loans indeed contain an insurance premium and how those premia are determined. A simple theoretical model predicts that interest rates of interlinked loans increase with income volatility when insurance premia exist. Based on data from a small-scale fishery in India, calculations show that, on average, lenders receive 25 per cent of the income, which corresponds to an average interest rate of 49 per cent p.a. A panel data analysis confirms theoretical predictions that interlinked loans contain an insurance component paid by the borrowers. [ABSTRACT FROM AUTHOR]

Purpose: This paper evaluates the working capital management (WCM) efficiency of the Indian manufacturing industries through data envelopment analysis (DEA) and empirically investigates the influence of several exogenous variables on the WCM efficiency. Design/methodology/approach: WCM efficiency was calculated using BCC input-oriented DEA model. Further, the panel data fixed effect model was used on a sample of 1391 Indian manufacturing firms spread across nine industries, covering the period from 2008 to 2019. Findings: Firstly, the WCM efficiency of Indian manufacturing industries has been stable over the analysis period. Secondly, the capacity to generate internal resources, size, age, productivity, gross domestic product and interest rate significantly influence WCM efficiency. Research limitations/implications: First, the selected study period has observed various economic uncertainties including demonetization and recession, so the scenario might differ in normal conditions or country-wise. Second, the findings might not be generalizable to the developed economies, since the current study sample belongs to a developing economy, which further provides scope for comparative study. Practical implications: An efficient model for managing the working capital comprising most vital determinants could enhance the firms' valuation and goodwill. Also, this study would be helpful for financial executives, manufacturers, policymakers, investors, researchers and other stakeholders. Originality/value: This study estimates the industry-wise WCM efficiency of the Indian manufacturing sector and suggests measures to the concerned parties on areas to focus on and provide evidence on the estimated relationships of firm-level and macroeconomic determinants with WCM efficiency. [ABSTRACT FROM AUTHOR]

The present paper deals with the economic viability of a coal-fired power plant (CFPP) situated in the northern part of India. The plant with a capacity of 250 MW at various load conditions has been evaluated from an economic point of view. The present worth method is used for the evaluation of CFPP. Revenue earned, operating cost, fuel cost, insurance cost, maintenance cost, pumping cost and net present value are evaluated w.r.t interest rate, number of employees, and plant life. The payback period and the impact of various factors on plant net present value is assessed by taking plant life as 30 years. With the increase in interest rate, all the cost decreases for fixed plant life of 30 years. However, operating cost increases with the increase in the number of employees. Also, with the increase in plant life, all type of cost increases, however after 25 years, the net present value starts decreasing according to the present study. The result of this study concludes that the payback period of the plant is 10 years. It is expected that the outcomes of this case study will be beneficial for future researchers. [ABSTRACT FROM AUTHOR]

The paper studies the effect of a law that banned micro-credit lending in the state of Andhra Pradesh in India. Regions in Andhra Pradesh are matched to regions that did not face the ban. A difference-in-difference estimation of changes in matched regions is used to establish a causal impact on average household consumption in the region. The results show that the average household consumption in the ban-affected regions dropped by 15% immediately after the ban compared to the matched regions, and persisted for four quarters. The result is robust to cross-sectional variations in regional exposure to micro-finance prior to the ban, variation in rural and urban locations and variations in matching strategy. The analysis points to a ban as a sub-optimal intervention to improve customer welfare. [ABSTRACT FROM AUTHOR]

This paper tries to trace the relationship between finance and growth. There are several indicators which represent the degree of financial intermediation such as M3, Real Rate of Interest (RR) and economic growth. In this paper, we have used Time-series methodology such as Unit Root (ADF and Phillips-Perron Tests), Cointegration (developed by Johansen and Juselius), and Granger Pairwise causality. We have checked the presence of unit roots in the data, and all the three variables-Financial Development, RR and Growth Rate-are found to be integrated at first difference. Secondly, Johansen cointegration test results confirm the presence of long-run equilibrium relationship among the variables. Finally, the Granger causality supports the hypothesis of 'Finance-led Growth' indicating that the finance is a leading sector in India and is poised for development. This result supports the supply-leading hypothesis for Indian economy for the sample period. These findings have important implications for the conduct of economic policies in India. [ABSTRACT FROM AUTHOR]

The issue of fiscal policy affecting interest rates is ever-evolving that depends on the structure of the economy and the strength of the financial markets. Hence, it is necessary to continuously validate this relationship between fiscal policy and interest rates. Towards this, the present paper tries to empirically examine and understand the transmission channels through which fiscal policy could affect short, medium, and long-term interest rates in India using Structural Vector Autoregression (SVAR) and Toda-Yamamoto causality approaches. Our results suggest that fiscal policy has a marginal impact on interest rates in the short run, while it has a larger positive impact on interest rates in the long run through the inflation route. In terms of the policy, in the long run, there is a need for containing the structural part of the fiscal deficit within the fiscal consolidation (Fiscal Responsibility and Budget Management Act) framework in India. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this paper is to analyze the impact of the cost of microfinance intermediation on borrowers' loan size. The identified transaction cost and credit risk factors tell about what a lender takes into accounts while screening and allocating loan amounts to the borrowers, where the lender has limited information about the client's ability to repay. Design/methodology/approach: The analysis is based on the primary data collected from a sample of 498 microfinance institutions (MFI) linked group clients covering two microfinance leading states of India. Findings: Empirical findings suggest that the cost of microfinance intermediation has an impact on borrowers' loan size. To reduce the cost, the MFIs lend big loans to clients having a high income, assets, land size, lower informal borrowings and having longer loan experiences. In MFI lending, the younger and less educated people are the ones who demand bigger loan amounts. The geographical distance of borrowers' location from MFI offices, group size and interest rate are the other factors that influence the loan size. Originality/value: The past empirical works seem to have not focused on how the cost of microfinance intermediation creates loan size variation among the borrowers in joint liability group lending. The endogeneity problem has not been resolved. The present article thus identifies the factors that influence the individual member loan size by using two-stage least squared regression to tackle the issue of endogeneity. [ABSTRACT FROM AUTHOR]

The economic impacts of COVID‐19 lockdowns on poor and vulnerable households living in rural areas of developing countries are not well understood due to a lack of detailed micro‐survey data at the household level. Utilizing weekly financial transaction data collected from households residing in a rural region of India, we estimate the impacts of India's COVID‐19 lockdown on household income, food security, welfare, and access to local loan markets. A large portion of households living in our study region is reliant on remittances from migrants to sustain their livelihoods. Our analysis reveals that in the month immediately after India's lockdown announcement, weekly household local income fell by INR 1,022 (US$ 13.5), an 88% drop compared to the long‐term average with another 63% reduction in remittance. In response to the massive loss in earnings, households substantially reduced meal portions and consumed fewer food items. Impacts were heterogeneous; households in lower income quantiles lost a higher percentage of their income and expenditures, but government food aid slightly mitigated the negative impacts. We also find an increase in the effective interest rate of local borrowing in cash and a higher demand for in‐kind loans, which are likely to have an adverse effect on households who rely on such services. The results from this paper have immediate relevance to policymakers considering additional lockdowns as the COVID‐19 pandemic resurges around the globe and to governments thinking about responses to future pandemics that may occur. [ABSTRACT FROM AUTHOR]

The key problem of Indian agriculture is finance. Several weaknesses of the rural financial delivery system, have not been corrected even after almost 40 years of bank nationalization of 1969 which focused on enhancing the outreach and access to rural credit in India. In addition to reviewing agricultural credit policies followed in India and assessing the trends and progress in the credit flow and access, this paper aims at examining the suitability of government-directed microfinance activities as an alternate tool to the formal credit delivery mechanism in rural areas. Drawing upon the field surveys conducted in four districts of two federal states in India, the paper not only indicates the wide recognition the program has gained within the rural community but also reflects the inequitable impact of microfinance initiative, and highlights a few prominent flaws in program implementation and administrative mismanagement which reduce the effectiveness of the program. While the survey findings reveal the main problem areas like unfriendly attitude of bank officials, inaccessible bank branches, non-availability of timely and adequate credit, sub-optimal selection of key economic activities and marketrelated problems, the regression result points out that land-based activities are not remunerative for the microfinance beneficiaries. This analysis also indicates that literacy, interest rate on loanable funds, ownership of productive assets and savings are the major determinants of the income function. The paper concludes with some policy implications for improving the design for implementing the program. The paper adds to the extant knowledge about microfinance programs by comparing the performance of formal banking with the informal banking through microfinance initiatives in a developing country like India. [ABSTRACT FROM AUTHOR]

Purpose - The purpose of this paper is to construct a financial development index (FDI) for the Indian economy and also examine the relationship between FDI and economic growth. Design/methodology/approach - Augment Dickey Fuller, Phillips Perron and Ng Perron unit root tests are employed in order to determine the level of integration. The long- and short-run dynamics are obtained by using auto-regressive distributed lag approach to cointegration and rolling window approach to estimate coefficient of each observation. Findings - The results indicate that long-run relationship is presented among the economic growth, FDI, real-interest rate (RIR), labor force and capital. But FDI negatively associated with economic growth in the case of long- and short-run and RIR also negatively determine the economic growth only in the long run. The rolling regression result confirms that FDI negatively associated to growth in the years of 1978, 1979, 1984-1987, 1990, 1996-2000, 2004 and 2005 and RIR is impede economic growth in the years of 1978, 1979, 1986, 1988-1997, 2001, 2002, 2006 and 2008. Originality/value - The paper constructs an FDI for the Indian economy by using the four indicators of financial development. The findings are useful for India's policy makers in order to maintain the parallel expansion of financial development and economic growth. [ABSTRACT FROM AUTHOR]

The paper examines the market microstructure - A descriptive study of the nature and structure of the Indian money market. For the empirical analysis we have studied each of the four sub-markets of the money market - Commercial Paper (CP), Certificate of Deposit (CD), Call rate (CMM)and T-Bills. Our paper looks at the qualitative aspects, the granular view of the Indian money market. It studies the overall trends, growth rates and index of interest rates of the four submarkets of the Indian money market. The paper clearly shows that the short-term interest rate follows almost the same pattern; breaks occur in a similar fashion. We attribute this decline to change in market microstructure which is a consequence to the liberalization of the money market. The growth analysis is done with the help of semi-log equations, structural breaks to study the overall growth rates for different markets. It is evident from the paper that on the whole, there has been a declining trend in the money market rates, with some differences between sub-periods. The overall and period-wise trends and growth rates also exhibit similar patterns amongst the four short-term interest rates, where all rates are falling. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this paper is to empirically analyze the determinants of capital structure and their long-run equilibrium relationships with firm-specific and macroeconomic indicators for Indian manufacturing firms. Design/methodology/approach: The study is conducted using the panel semi-parametric and non-parametric regression models to identify the key determinants of capital structure. Panel cointegration models are also employed for analyzing the long-run equilibrium association of capital structure with its determinants. Findings: The study finds that each manufacturing sector has unique determinants of capital structure. The debt level is significantly affected by asset tangibility, growth opportunity, effective tax rate, non-debt tax shield, cash flow, profitability, firm size, foreign investment, government borrowing, economic growth, and interest rate. All these firm-specific and macroeconomic variables have strong long-run equilibrium relationship with capital structure as a whole. Practical Implication of the Study: The study analyzes the determinants of capital structure for eight manufacturing sectors of India, which helps firm managers and policy-makers to identify appropriate factors that maximize firm value. The sector-specific features of firms may lead to a new path with regard to corporate governance and ownership structure to enhance stakeholder's satisfaction. Originality/value: The use of semi-parametric and non-parametric panel regression models to analyze the determinants of capital structure, and the use of panel cointegration approach to explore the long-run equilibrium relationship between the determinants and its factors are the unique contributions of the present research. [ABSTRACT FROM AUTHOR]

This paper attempts to investigate how changes in policy rates affect the transmission of monetary policy through the bank lending channel in India while also taking into consideration the roles played by differences in bank ownership, economic period and bank size. We specifically focus on the implementation of monetary policy through the use of the Weighted Average Call Rate (WCR) as a policy tool with frequent adjustments. Using an unbalanced panel dataset consisting of 701 observations for Indian scheduled commercial banks for the period 2000-2019, we examine the reaction of loan supply to changes in the WCR while taking into account controls such as liquidity, capitalization and size. We find that loan supply is adversely affected by a change in WCR and hence, we support the view that it is an effective monetary policy instrument. Secondly, we find that banks of all ownership types as well as sizes reduce loan supply during a contractionary policy period. Thirdly, loan supply is reduced during a rate cut in the crisis and post crisis periods. Therefore, our results support the existence of a bank lending channel in India through the use of WCR. [ABSTRACT FROM AUTHOR]

This paper examines the impact of fiscal deficit and its financing pattern on private corporate sector investment in India, for the period from 1970–1971 to 2012–2013. Using Autoregressive Distributed Lag (ARDL) Models, the study finds that fiscal deficit crowds out private investment both in the long run and in the short run. The results also show that internal (domestic) financing of fiscal deficit has significant negative impact on private investment but external (foreign) financing of fiscal deficit has insignificant effect. In the short run, availability of bank credit plays a more important role in investment decision making than the rate of interest in India. The study suggests that government should maintain the fiscal deficit within a sustainable level by reducing its unnecessary non-developmental expenditure, subsidies etc. The government should restructure its financing pattern of fiscal deficit since internal financing has a significant negative impact on private investment. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this paper is to explore country-specific and firm-specific factors responsible for attracting private equity investment across sectors in India. Design/methodology/approach: The analysis involves three macroeconomic variables (rule of law, net FIIs and interest rate) across six sectors. Also, three firm-specific variables (ROE, DTA and EBITDA margin) for 89 companies with private equity across five sectors. OLS, Prais–Winsten, multinomial logit and probit regression models have been used for analysis. Findings: The findings show that while rising foreign investments drive PE activity in energy and engineering and construction is one sector, strong legal structures and rising interest rates are the drivers of PE activity in the healthcare sector. In firm-specific analysis, though the profitability and leverage effect is invisible in the industrials and healthcare sectors, it is quite significant in IT and telecom is one sector and commodities sector. Research limitations/implications: Results are subject to limited data on private equity in different sectors. There is a lack of data for comparison on companies belonging to certain sectors like real estate, infrastructure, etc. A limited literature is available for reference purpose. Research findings may serve as preliminary criteria for private equity investors seeking investment in India. Originality/value: The value of this research is in the identification of most relevant macroeconomic and firm-specific factors for private equity investors seeking investment across sectors in India. [ABSTRACT FROM AUTHOR]

The Reserve Bank of India (RBI) used exceptional monetary measures to address the taper tantrum-induced exchange market pressure on the rupee in the third quarter of 2013. This paper provides theoretical and empirical justifications for using the monetary policy to defend the exchange rate under exceptional circumstances, and also outlines certain preconditions which may determine the success of such a policy response. The empirical hypothesis on the effectiveness of an interest rate defence has been examined using four alternative approaches: first, the conventional monetary approach to exchange rate; second, uncovered interest rate parity (UIP) condition in the presence of timevarying risk premium; third, impact assessment in a vector auto regression (VAR) framework; and fourth, a comparative quantitative assessment of the costs associated with depreciation of the rupee relative to a higher interest rate for the Indian corporate sector in a panel regression framework. The scope for different policy inferences that could be derived from the results of alternative approaches highlight the need for a careful assessment of preconditions while designing and applying monetary measures to stabilise the exchange rate. [ABSTRACT FROM AUTHOR]

This research article scrutinises the connotation among bond prices and electricity prices (EP) across different threshold regions in India using threshold regression analysis. We resolve to investigate whether or not there exists a non-linear association between bond prices and EP and if this relationship differs across different threshold regions. The data covers a period of five years from 2018 to 2022, and the analysis includes three different threshold regions based on different threshold bond prices. The results show that there exists significant non-linear association between bond prices and EP, and this relationship differs across the three threshold regions. We surmise presence of an optimality between bond prices (interest rates) and EP, beyond which the EP increase. We conclude that as interest rates increase, the cost of financing for electricity companies also increases, which may lead to higher EP. However, there may be a certain threshold beyond which the cost of financing becomes too high, leading to a decrease in investment and ultimately a decrease in electricity supply, which in turn could lead to higher EP. [ABSTRACT FROM AUTHOR]

Purpose: A change in monetary operating procedures provides a natural experiment which is used to evaluate, first, whether Indian monetary policy transmission is better when durable liquidity is in surplus or when it is in deficit; second whether it is better with interest rates as the policy instrument or quantity of money or a mixture of the two. Design/methodology/approach: This study first shows that the period of analysis can be divided into two separate regimes one of liquidity surplus (2002–2010) and the other of deficit (2011–2019).This study then estimates separate structural vector auto-regressions (SVARs) for the financial and real sector, with relevant exogenous foreign, policy and other variables for each of the periods as well as SVARs for the whole period with alternative operating instruments. Findings: Monetary transmission from the repo rate was better during the period the liquidity adjustment facility (LAF) was in surplus with the central bank in absorption mode denoting excess durable liquidity. Pass through was faster and the repo rate had a greater influence on other variables. The impact of the rate on output gap exceeds that on inflation. The weighted average call money rate was found to outperform others as the operating target. Monetary policy has evolved so that policy rates are more effective in transmission compared to money supply, but best results are when durable liquidity is also in surplus. Originality/value: The results contribute to ongoing debates on the Indian monetary policy framework and give useful inputs for policy in emerging markets where research is scarce. They suggest keeping the LAF in deficit mode over 2011–19 was not optimal. [ABSTRACT FROM AUTHOR]

Predicting currency movements is perhaps one of the hardest exercises in economics as it has many variables affecting its market movement. This study concerns with some of the usual macroeconomic variables which, in theory, are expected to affect the exchange rate between two countries. Indian Rupee is currently losing its value to the Dollar which could certainly be seen to affect the Indian economy adversely. This paper attempts to investigate the interactions between the foreign exchange and stock market in India as well as determine some of the economic factors which could have influenced the Indian rupee vis-à-vis the US Dollar over the period 1990-2011. This paper studies the effect of exchange rate on three market indices; BSE Sensex index, BSE IT sector index and BSE Oil & Gas sector index for the period January 2006 to March 2012. No significant interactions were found between foreign exchange rate [USD/INR] and stock returns. Economic variables like inflation differential, lending interest rates and current account deficit (as a percentage of GDP) are found to significantly affect the exchange rate [USD/INR]. This study also analyzes how the real GDP of India is currently behaving with respect to the exchange rate. It is found that they share a negative relationship which is highly statistically significant. [ABSTRACT FROM AUTHOR]

Small and medium enterprise (SMEs) sector is central to youth employment generation and contribution to national GDPs globally. This paper aimed at comparing the enabling environment for youth SMEs startups between India and Tanzania countries. This paper employed systematic literature review method where critical review of secondary data was made. The analysis noted that the two countries differ in three critical aspects of enabling environment for SMEs start up. These aspects are financial support, training support and material support. India has various grants, free and low interest rates schemes unlike Tanzania. The training system in India has been linked with some financial schemes, the component that you can hardly find in Tanzania. Also, India has various non-financial support for SMEs startup such as machines provision, workshop attendance support and spaces/accommodation support for small businesses. Tanzania has tried for the material support such as space support, yet it charges the SMEs owners some rents similar to established SMEs. Generally, SMEs startup environment in India is better compared to Tanzania. Tanzania can generate some lessons from India so as to improve its enabling environment for youth SMEs start up. [ABSTRACT FROM AUTHOR]