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Pro‐market reforms and allocation of capital in India

Author

Listed:
  • Sameeksha Desai
  • Johan Eklund
  • Andreas Högberg

Abstract

Purpose - The purpose of this paper is to study the efficiency of capital allocation, across levels of ownership, in the aftermath of pro‐market reforms in India. Design/methodology/approach - The paper measures investment efficiency using the accelerator principle and examines the effect of ownership type on capital allocation. Findings - No significant improvement in capital allocation during the period studied is found. The findings suggest firms face significant costs in adjusting their capital stock. Originality/value - The paper uses unique data to estimate the elasticity of capital with respect to output.

Suggested Citation

  • Sameeksha Desai & Johan Eklund & Andreas Högberg, 2011. "Pro‐market reforms and allocation of capital in India," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 3(2), pages 123-139, May.
    • Handle: RePEc:eme:jfeppp:v:3:y:2011:i:2:p:123-139
    DOI: 10.1108/17576381111133606
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    More about this item

    Keywords

    Capital; Cost allocation; Economic reform; Corporate ownership; India;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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