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Saving, Lending and Interest Rates: A Critique (of the Model) of Financial Liberalisation in India

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  • Romar Correa
  • Tripati Rao

Abstract

The case for financial liberalisation is founded on the neoclassical proposition that savings causes investment and that the interest rate tends to move to equate the two. We find little support for this thesis from the experience of India. Alternatively, we suggest that the Post Keynesian approach that includes the liquidity preferences of banks might be a fruitful way to examine the dynamics of an economy in transition.

Suggested Citation

  • Romar Correa & Tripati Rao, 2004. "Saving, Lending and Interest Rates: A Critique (of the Model) of Financial Liberalisation in India," International Review of Applied Economics, Taylor & Francis Journals, vol. 18(3), pages 289-299.
    • Handle: RePEc:taf:irapec:v:18:y:2004:i:3:p:289-299
    DOI: 10.1080/0269217042000227105
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    References listed on IDEAS

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    1. Stephen Rousseas, 1998. "Post Keynesian Monetary Economics," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-26456-8.
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    Cited by:

    1. Bhaumik, Sumon Kumar & Piesse, Jenifer, 2008. "Does lending behaviour of banks in emerging economies vary by ownership? Evidence from the Indian banking sector," Economic Systems, Elsevier, vol. 32(2), pages 177-196, June.

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