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Private Investment and Financial Sector Policies in India and Malaysia

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  • Ang, James B.

Abstract

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

Suggested Citation

  • Ang, James B., 2009. "Private Investment and Financial Sector Policies in India and Malaysia," World Development, Elsevier, vol. 37(7), pages 1261-1273, July.
    • Handle: RePEc:eee:wdevel:v:37:y:2009:i:7:p:1261-1273
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