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Private Investment And Financial Sector Policies In Developing Countries

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  • James Ang

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.

Suggested Citation

  • James Ang, 2008. "Private Investment And Financial Sector Policies In Developing Countries," Monash Economics Working Papers 07/08, Monash University, Department of Economics.
  • Handle: RePEc:mos:moswps:2008-07
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    File URL: http://www.buseco.monash.edu.au/eco/research/papers/2008/0708privateang.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Private investment; financial sector policies; India; Malaysia.;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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