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India's Financial Globalisation

Author

Listed:
  • Ila Patnaik
  • Ajay Shah

Abstract

India embarked on reintegration with the world economy in the early 1990s. At first, a certain limited opening took place emphasising equity flows by certain kinds of foreign investors. This opening has had myriad interesting implications in terms of both microeconomics and macroeconomics. A dynamic process of change in the economy and in economic policy then came about, with a co-evolution between the system of capital controls, macroeconomic policy, and the internationalisation of firms including the emergence of Indian multinationals.Through this process, de facto openness has risen sharply. De facto openness has implied a loss of monetary policy autonomy when exchange rate pegging was attempted. The exchange rate regime has evolved towards greater flexibility.

Suggested Citation

  • Ila Patnaik & Ajay Shah, 2011. "India's Financial Globalisation," IMF Working Papers 2011/007, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2011/007
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    References listed on IDEAS

    as
    1. Patnaik, Ila, 2005. "India's Experience with a Pegged Exchange Rate," India Policy Forum, National Council of Applied Economic Research, vol. 1(1), pages 189-226.
    2. Patnaik, Ila & Shah, Ajay, 2010. "Why India Choked when Lehman Broke," India Policy Forum, National Council of Applied Economic Research, vol. 6(1), pages 39-72.
    3. Patnaik, Ila & Shah, Ajay & Sethy, Anmol & Balasubramaniam, Vimal, 2011. "The exchange rate regime in Asia: From crisis to crisis," International Review of Economics & Finance, Elsevier, vol. 20(1), pages 32-43, January.
    4. Ms. Hiroko Oura, 2008. "Financial Development and Growth in India: A Growing Tiger in a Cage?," IMF Working Papers 2008/079, International Monetary Fund.
    5. Ajay Shah & Ila Patnaik, 2007. "India's Experience with Capital Flows: The Elusive Quest for a Sustainable Current Account Deficit," NBER Chapters, in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices, and Consequences, pages 609-644, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Didier, Tatiana & Schmukler, Sergio L., 2013. "The financing and growth of firms in China and India: Evidence from capital markets," Journal of International Money and Finance, Elsevier, vol. 39(C), pages 111-137.
    2. Ila Patnaik & Ajay Shah & Nirvikar Singh, 2013. "Foreign Investors under Stress: Evidence From India," International Finance, Wiley Blackwell, vol. 16(2), pages 213-244, June.
    3. Radhika Pandey & Rajeswari Sengupta & Aatmin Shah & Bhargavi Zaveri, 2019. "Evolution of capital controls on foreign institutional investment in India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2019-034, Indira Gandhi Institute of Development Research, Mumbai, India.

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    More about this item

    Keywords

    WP; India; firm; capital control; capital; financial globalisation; capital controls; capital flows; firm internationalisation; inbound FDI investor; portfolio flow; issues circular; capital controls in India; capital account restriction; reserve bank of India; foreign direct investment regime; private equity; capital mobility; capital account openness; high quality firm; Capital account; Foreign direct investment; Exchange rate arrangements; Stock markets; Global;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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