Financial Liberalisation

K.V. Murthy (bhanumurthykv@yahoo.com) and Sonia Goel
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Sonia Goel: Department of Economics, Ramjas College, Delhi University.

Review of Market Integration, 2011, vol. 3, issue 2, 181-223

Abstract: Short-run market integration cannot be subsumed within the long run, since the money market is essentially for enabling the liquidity needs, through short term credit instruments. Through Ravallion (1986) tests we have examined short-run market integration of Money Market in India, including testing for the ‘central market hypothesis’. We find that the sub-markets are not segmented. Therefore, it can be expected that information flows lead to price adjustments across sub-markets of the money market. Second, arbitrage possibilities do not exist. On the whole we conclude that the money market in India displays short-run market integration.

Keywords: Money market; market integration; central market; benchmark rate (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:sae:revmar:v:3:y:2011:i:2:p:181-223

DOI: 10.1177/097492921100300204

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