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Law, regulation and institutions for financial development: Evidence from India

  • Rathinam, Francis Xavier
  • Raja, Angara V.

This paper revisits the "finance-growth" thesis from the perspective of the determinants of financial sector growth such as legal and institutional developments and financial regulation in the Indian context. With the help of newly constructed indices of procedural law, regulation and institutional development, within a multivariate VAR framework, Granger causality tests and policy simulations are employed to investigate the long run causal relationships between the determinants and the financial sector. The results show that legal and institutional developments and financial deregulation cause financial sector growth with a considerable feedback and further finance causes economic growth.

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Article provided by Elsevier in its journal Emerging Markets Review.

Volume (Year): 11 (2010)
Issue (Month): 2 (June)
Pages: 106-118

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Handle: RePEc:eee:ememar:v:11:y:2010:i:2:p:106-118
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620356

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