PRIVATE INVESTMENT AND FINANCIAL SECTOR POLICIES IN DEVELOPING COUNTRIES

James Ang

No 07/08, Monash Economics Working Papers from Monash University, Department of Economics

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.

Keywords: Private investment; financial sector policies; India; Malaysia. (search for similar items in EconPapers)
JEL-codes: E22 O16 O53 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2008-04-01
New Economics Papers: this item is included in nep-cwa, nep-dev, nep-mac and nep-sea
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