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Private Investment And Financial Sector Policies In Developing Countries

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Author Info
James Ang

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Abstract

This paper examines the role of financial sector policies in determining private investment in the economies of India and Malaysia. The results suggest that the presence of significant directed credit programs favoring certain priority sectors in the economies appear to be harmful for private capital formation in both countries. Interest rate controls seem to have a positive impact on investment in the private sector, and the effect is found to be stronger in India. While high reserve and liquidity requirements exert a negative influence on private investment in India, the effect is found to be positive in Malaysia.

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File URL: http://www.buseco.monash.edu.au/eco/research/papers/2008/0708privateang.pdf
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Publisher Info
Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 07/08.

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Length: 28 pages
Date of creation: 01 Apr 2008
Date of revision:
Handle: RePEc:mos:moswps:2008-07

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Postal: Department of Economics, Monash University, Victoria 3800, Australia
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Related research
Keywords: Private investment; financial sector policies; India; Malaysia.;

Find related papers by JEL classification:
E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  2. Guncavdi, Oner & Bleaney, Michael & McKay, Andrew, 1998. "Financial liberalisation and private investment: evidence from Turkey," Journal of Development Economics, Elsevier, vol. 57(2), pages 443-455. [Downloadable!] (restricted)
  3. Aschauer, David Alan, 1989. "Does public capital crowd out private capital?," Journal of Monetary Economics, Elsevier, vol. 24(2), pages 171-188, September. [Downloadable!] (restricted)
    Other versions:
  4. Odedokun, M. O., 1996. "International evidence on the effects of directed credit programmes on efficiency of resource allocation in developing countries: The case of development bank lendings," Journal of Development Economics, Elsevier, vol. 48(2), pages 449-460, March. [Downloadable!] (restricted)
  5. Courakis, Anthony S, 1984. "Constraints on Bank Choices and Financial Repression in Less Developed Countries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 46(4), pages 341-70, November.
  6. Roberto Pereira Guimarães & Olaf Unteroberdoerster, 2006. "What's Driving Private Investment in Malaysia? Aggregate Trends and Firm-Level Evidence," IMF Working Papers 06/190, International Monetary Fund. [Downloadable!]
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  8. Pradhan, B. K. & Ratha, D. K. & Sarma, Atul, 1990. "Complementarity between public and private investment in India," Journal of Development Economics, Elsevier, vol. 33(1), pages 101-116, July. [Downloadable!] (restricted)
  9. James B. Ang, 2008. "Are Financial Sector Policies Effective In Deepening The Malaysian Financial System?," Contemporary Economic Policy, Western Economic Association International, vol. 26(4), pages 623-635, October. [Downloadable!] (restricted)
    Other versions:
  10. Schwarz, Anita M., 1992. "How effective are directed credit policies in the United States? A literature survey," Policy Research Working Paper Series 1019, The World Bank. [Downloadable!]
  11. Nickell, Stephen, 1985. "Error Correction, Partial Adjustment and All That: An Expository Note," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 47(2), pages 119-29, May.
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    Other versions:
  13. Giovannini, Alberto & de Melo, Martha, 1993. "Government Revenue from Financial Repression," American Economic Review, American Economic Association, vol. 83(4), pages 953-63, September. [Downloadable!] (restricted)
  14. Inder, Brett, 1993. "Estimating long-run relationships in economics : A comparison of different approaches," Journal of Econometrics, Elsevier, vol. 57(1-3), pages 53-68. [Downloadable!] (restricted)
  15. Gennotte, Gerard & Pyle, David, 1991. "Capital controls and bank risk," Journal of Banking & Finance, Elsevier, vol. 15(4-5), pages 805-824, September. [Downloadable!] (restricted)
  16. James B. Ang & Warwick J. McKibbin, 2005. "Financial Liberalization, Financial Sector Development And Growth: Evidence From Malaysia," CAMA Working Papers 2005-05, Australian National University, Centre for Applied Macroeconomic Analysis. [Downloadable!]
    Other versions:
  17. McKinnon, Ronald I & Pill, Huw, 1997. "Credible Economic Liberalizations and Overborrowing," American Economic Review, American Economic Association, vol. 87(2), pages 189-93, May. [Downloadable!] (restricted)
  18. Demetriades, Panicos O. & P. Devereux, Michael & Luintel, Kul B., 1998. "Productivity and financial sector policies: Evidence from South East Asia," Journal of Economic Behavior & Organization, Elsevier, vol. 35(1), pages 61-82, March. [Downloadable!] (restricted)
    Other versions:
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