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Determinants of Venture Capital Investment in India: A Time Series Analysis

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  • Mohammad Mustafa
  • Syed Shahid Mazhar

Abstract

The purpose of this study is to explore how venture capital investment is sensitive to the macro-economic variables in emerging market economies like India. We examine the determinants of venture capital investment considering domestic factors such as GDP growth, inflation rate, and stock market liquidity. From a global perspective, we have considered global liquidity as an influential factor. Based on quarterly data spanning between Q1, FY2007, and Q4 FY2017, the vector error correction method explores that global liquidity is a crucial factor along with the domestic macroeconomic variables. We believe that while the robust economic outlook is critical for attracting venture capital investment, global liquidity acts as a catalyst for the supply of such investment.

Suggested Citation

  • Mohammad Mustafa & Syed Shahid Mazhar, 2020. "Determinants of Venture Capital Investment in India: A Time Series Analysis," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 12(1), pages 19-30, June.
    • Handle: RePEc:rfb:journl:v:12:y:2020:i:1:p:19-30
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