This paper attempts to shed some light on the role of financial sector policies in generating new knowledge, drawing on the experience of one of the fastest growing and largest developing countries. Using relatively long time series data, the results in this paper indicate that interest rate restraints help generate knowledge in India’s economy. Other financial repressionist policies, in the form of high reserve and liquidity requirements as well as significant directed credit controls, appear to have a dampening effect on ideas production. The results lend some support to the argument that some form of financial sector reforms may help stimulate economic growth via increasing innovative activity.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
14495.
Find related papers by JEL classification: E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
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