Innovation and Financial Liberalization: The Case of India

James Ang

No 1404, Economic Growth Centre Working Paper Series from Nanyang Technological University, School of Social Sciences, Economic Growth Centre

Abstract: This paper attempts to shed some light on the role of financial sector policies in generating new knowledge, drawing on the experience of one of the fastest growing and largest developing countries. Using time series data for India over the period 1963-2005, the results indicate that interest rate restraints help generate ideas. Other financial repressionist policies, in the form of high reserve and liquidity requirements, as well as significant directed credit controls, appear to have a dampening effect on ideas production. These results lend some support to the argument that some form of financial sector reforms may help stimulate economic growth via increasing technological innovation.

Keywords: financial liberalization; Schumpeterian growth (search for similar items in EconPapers)
JEL-codes: O30 O40 O53 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2014-05
New Economics Papers: this item is included in nep-cse, nep-fdg and nep-ino
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Citations: View citations in EconPapers (16)

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